This case study presents an audit memo analyzing the financial statements of Always Precise Instruments Private Limited (API), a supplier of military equipment. The memo, written from the perspective of an audit manager, addresses key aspects of the audit, including ratio analysis to identify potential audit risks, such as those related to current and quick ratios, return on equity, and gross margin. It also identifies internal control weaknesses within API's inventory system, outlining potential audit risks and proposing appropriate audit procedures. Furthermore, the memo examines specific audit assertions and recommends suitable sampling procedures, providing justifications for each. The analysis covers various financial ratios, including current ratio, quick asset ratio, return on equity, return on total assets, gross margin, marketing expense, administrative expenses, times earned interest, days in inventory, days in accounts receivable, and debt to equity ratio. For each ratio, the memo identifies potential audit risks and suggests corresponding audit procedures. The memo also details internal control weaknesses, potential audit risks, and suggested audit procedures related to authorization of purchase orders and production orders. This case study provides a comprehensive overview of the auditing process and helps in understanding the various aspects of an audit.