Finance Systems and Auditing - Assignment
Added on 2019-12-04
15 Pages4081 Words118 Views
Finance Systemsand Auditing 1
TABLE OF CONTENTSINTRODUCTION................................................................................................................................4TASK 2.................................................................................................................................................42.1 Identification of different components of business risk.........................................................42.2 Analysis of control systems in place in a business................................................................52.3 Evaluation of risk of fraud within a business suggesting methods for detection..................5TASK 3.................................................................................................................................................63.1 Planning of audit with reference to scope, materiality and risk.............................................63.2 Identification and use of appropriable audit tests..................................................................83.3 Record of audit process in a proper manner..........................................................................94.1 Draft of audit report.............................................................................................................104.2 Draft of management letter in relation to a statutory audit..................................................12CONCLUSION..................................................................................................................................12REFERENCES...................................................................................................................................142
ILLUSTRATION INDEXIllustration 1: Process of audit planning..........................................................................................53
INTRODUCTIONFinancial systems and auditing is essential for corporate entities in order to showaccuracy and reliability of financial statements published by them in their annual report. Ownersand management authorities of companies are different individuals. Due to this aspect,stakeholders cannot rely on the information provided by management and as a consequenceexternal audit is mandatory for corporate entities (Chapman and Kihn, 2009). Present study isfocused on different aspects of audit by considering financial information of Tesco and FA JetLtd. In this report, description will be provided regarding business risk and audit planning. Onthe basis of this description, evaluation of accuracy of financial statements of Tesco and FA JetLtd will be made. TASK 22.1 Identification of different components of business riskManagement of companies are required to face various business risks in order to achieveaims and objectives. They are required to mitigate this risk by reducing the uncertainty. Byconsidering operational activities of Tesco, description of different components of business riskare as follows:Risk of employee turnover: Human resources are crucial asset of business. Thus,management make their best attempt to retain them. It is because; increase in employee’sturnover will make reduction in efficiency of business and along with this, it will increasethe cost of recruitment and training.Technological risk: Entire operational activities of Tesco are integrated with thetechnology. Due to this aspect, there is a risk of technological failure in business. Thisrisk has direct impact on the revenue and profitability of the firm (Adams, 2002).Company is also engaged in online selling; thus failure in IT system may have drasticadverse impact on its working and operations.Political and regulatory risk: All the business organizations are required to operate inaccordance with the regulatory norms (Lambert, Leuz and Verrecchia, 2007). Failure incompliance of these norms can lead to the charge of legal penalties. 4
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