ABC Learning Case Study: An Overview of Auditing Processes

This case study analyzes the auditing proceedings of ABC Learning, focusing on the significance of rules and regulations in business operations. The study reviews relevant auditing standards such as ASA 500, ASA 240, and ASA 315, while utilizing financial tools like trend analysis, Beneish M score, DuPont analysis, and common size statements. The analysis reveals that the company faces challenges including higher operating expenses, declining surplus and reserves, and a consistent Beneish M score exceeding -2.22 since 2003. Recommendations include reducing operational costs, avoiding accounting manipulation, improving profitability, and efficiently utilizing shareholder funds to enhance operational efficiency. The conclusion highlights the misuse of shareholder money and emphasizes the importance of improving business profitability to increase surpluses and reserves. The study suggests shareholders reconsider their investments due to poor returns.

ABC Learning Case
Study
- An overview into the auditing
proceedings

Introduction
• The intent for the presentation is to highlight
the greater emphasis on the significance of
rules and regulations in performing the
operations of the business of an enterprise
(Willoughby, Evans and Nowak 2015).
• This presentation has focused and researched
on the ABC Learning’s case study.

Literature Review
In this part of the study the different auditing
standards have been discussed that have been
applied while analyzing the case of the ABC
Learning’s. These auditing standards are as
follows:
• ASA 500
• ASA 240
• ASA 315

Literature Review
• ASA 220
• ASA 230
• ASA 200

Tools Used
• Analysis of the trend
• Analysis of Beneish M score
• Du Pont Analysis
• Analysis of Common Size Statement

Analyses utilizing the tools of finance
• Analysis of the Trend
- Analysis of the income statement
- Balance Sheet Analysis
• Analysis of Beneish M Score
• Analysis of DuPont
• Analysis of Common size statement
- Common size income statement
- Common size Balance sheet

Summary
• The company has more operating expenses than the
operating profits.
• The business enterprise is not capable to improve its
returns on the equity (Khan and Ahmed 2018).
• The analysis of the statement of affairs of business
enterprise displayed the surplus and reserves of the
business is constantly decreasing.
• The business has been constantly maintaining a score
that is more than -2.22 ever since from the year 2003
(Khan and Ahmed 2018).

Recommendation
• This should diminish the operational costs in manner of bringing
profitability in the operations of the business.
• The business enterprise must not get caught up in the cases like
accounts manipulation as this matters might even results in
liquidation of the business.
• The business enterprise should try hard forward to improve this
surplus and reserves straight away. In the process of this, it must be
focused on improving the profitability and cash flows of the company.
• The business enterprise is receiving fresh funds from this shareholder
in conditions of share capital. The business should make most of the
funds to increase the operational efficiency to a grand level.

Conclusion
• The business is misusing with the shareholders money by
various processes like accounts manipulation as this might
result in the business being closed.
• The business has to be attentive in improving the business
profitability because this will ultimately be the main
element of the surpluses and reserves of the business.
• The recommendation that can be provided to
shareholders is to stop all the investments in the business
enterprise as this does not have good returns from the
business.

References
• Willoughby, D., Evans, M.A. and Nowak, S., 2015. Do ABC eBooks boost engagement and
learning in preschoolers? An experimental study comparing eBooks with paper ABC and
storybook controls. Computers & Education, 82, pp.107-117.
• Faber, F.A., Lindmaa, A., Von Lilienfeld, O.A. and Armiento, R., 2016. Machine Learning
Energies of 2 Million Elpasolite (A B C 2 D 6) Crystals. Physical review letters, 117(13),
p.135502.
• Blythe, S.G., 2017. Attention, balance and coordination: The ABC of learning success. John
Wiley & Sons.
• Khan, M.M. and Ahmed, M.E., 2018. Capstone Project Based Experiential Learning-Case of
Institute of Business Management (IoBM).
• Chen, R. and Sharma, S.K., 2015. Learning and self-disclosure behavior on social networking
sites: the case of Facebook users. European Journal of Information Systems, 24(1), pp.93-106.
• Aryal, B., Laurent, C. and Geisler, M., 2015. Learning from each other: ABC transporter
regulation by protein phosphorylation in plant and mammalian systems. Biochemical Society
Transactions, 43(5), pp.966-974.
• Aithal, P.S. and Kumar, P.M., 2016. ABC Model of Research Productivity and Higher
Educational Institutional Ranking.

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