Evaluation of Internal Control System of Audit Clients of MYH

Running Head: AUDITING
Auditing
Name of the University
Name of the Student
Author Note

1AUDITING
Executive Summary
This report is prepared to evaluate the effectiveness of a system of internal control of the
audit clients of MYH. This analysis is done on the basis of evaluation and the facts of the
given case study. This report also uses the business risks that are faced by TCW. It is also
attributable to both external and internal factors. The funding is generated from the
evaluations of the facts that will help in planning an effective system of audit. Ratio analysis
has been used in analysing the risks that are associated in the mentioned accounts of TCW.
Such analysis will effectively help the management structure in identifying the strenghth and
weakness that are associated with different accounting system. These strengths and weakness
are particular in relation to purchase and accounts payable.

2AUDITING
Table of Contents
Introduction................................................................................................................................3
Answer 1A................................................................................................................................3
Answer 1B..................................................................................................................................7
Answer 2A.................................................................................................................................8
Answer 2b................................................................................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................13

3AUDITING
Introduction
This report is prepared to demonstrate the audit risks in relation to the long standing
and significant audit clients of Miller Yates Howarth(MYH) . The client is Trunkey Creek
wines( TCW). Such risks are normally related to the fraud activities. These risks also include
the efforts that are conducted by the auditors themselves(Barta, 2018). The areas for concern
include investment, accounts receivable , marketing expenses and property assets. The
auditor is required to plan the audit engagement .This can be planned by extracting the
information through reviewing the system notes in the permanent file. Also a new internal
control can be applied to manage the risks associated with it(Vovchenk et al., 2017). The
audit risks have been assessed in relation to the specific accounts . This has been done by the
computation of relevant ratios . The second part of the report represents the analysis of the
internal control systems. Also in this report the weaknesses of internal control system has
been assessed. This is mainly related to accounts payable and purchase account s which have
been identified and evaluated in this report.
Answer 1A
The first questions explains the audit risks that are associated with the TCW. It
analyses the ratios such as gearing ratio, profitability ratio , solvency ratio , efficiency ratios
and liquidity ratio. The financial analysis can be analysed effectively by computing the
ratios(Kraft,2014). This helps in assessing the auditors in understanding the financial position
of an organisation. In this particular case study, the evaluation of the accounts associated
with Turnkey Creek wines is determined by computing the relevant ratios. the accounts
relate to property assets, accounts receivable, marketing expenses and investment. According
to the case study the audit planning indicates that the audit would face numerous material
misstatements while assessing. Due to this the auditors have been burdened by the