Financial Systems Analysis and Audit Report for Minty Cola

This report provides a comprehensive analysis of Minty Cola's financial systems. It begins by examining the purpose and use of different accounting records, such as ledgers and prime entry books, and explores the importance of key financial concepts like accrual, going concern, business entity, historical cost, consistency, prudence, and materiality. The report then evaluates factors influencing the nature of Minty Cola's accounting system, including compatibility with business operations, employee perception, training levels, and the use of computerized versus manual systems. Furthermore, it delves into the various components of business risk, including product, market, financial, and execution risks, along with an analysis of the company's control systems. The report also assesses the risk of fraud within Minty Cola and proposes methods for its detection. Finally, the report outlines an audit plan, identifies appropriate audit tests, and describes the audit process, culminating in a draft audit report and a suitable management letter.

FINANCIAL SYSTEMS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1: Purpose and use of different accounting record..............................................................1
1.2 Importance and meaning of financial concepts................................................................2
1.3: Evaluating those factors which influence the nature of minty cola................................3
TASK 2............................................................................................................................................5
2.1 Different component of business risk ..............................................................................5
2.2 Analysis of control system in place of minty cola...........................................................6
2.3: Evaluate risk of fraud within Minty cola and method to detect fraud.............................7
TASK 3............................................................................................................................................8
3.1: Plan a audit report as per scope, materiality and risk......................................................8
3.2: Identify and make use of appropriate audit test..............................................................9
3.3: Audit process in proper manner....................................................................................10
TASK 4..........................................................................................................................................10
4.1: Draft audit report...........................................................................................................10
4.2: Suitable management letter ..........................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Financial system is a kind of system through which funds are being shared among
lenders, investor and borrowers. It is functioned at national, international as well as enterprises
specific level. Under this system cash, credit and other sources are categories in financial system.
It measure recording, verification and reporting of financial transactions that affect profitability,
revenue and other assets and liabilities of a company (Abdullah and Sofian, 2012). Under this
project report minty cola company is highlight to know about their management of financial
system.
There are various aspects of minty cola like how they are maintain records and following
accounting concept in their business. Likewise, factors those are affecting accounting system.
Also different kind of business risk associated with minty cola and on the basis of proper
evaluation of risk of fraud and appropriate method to control it. A audit plan is bing designed for
minty cola and a proper pattern of audit report to analyse the risk. And at last a management
letter is being drafted in respect to statutory audit of minty cola.
TASK 1
1.1: Purpose and use of different accounting record
Accounting record: It refer to be important source of information that are used by
company to prepare, verify and analyse the financial statements. It consist of various
documentation that are involve in formulation of financial statements and record which are
related with review of financial audit like recording of assets and liabilities, ledger statements,
journal and invoice statement of that particular transactions.
Purpose of accounting is to accrued and report on financial data regarding performance,
position and cash flow management of Minty Cola to reach a specific decision that how to Minty
cola mange their business transaction. Some of the accounting records are:
ledger: It is said to be summary of all cash transactions those are entered in relation to journal
which are list person transaction with concern data (Ajmiand et. al., 2014). It is needed to
prepare financial statements which includes different assets, owner's equity and other
expenditure. It is used to prepare trail balance to check the arithmetical accuracy of the books of
account.
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Prime entry book: The another name of this is book of first entry as it record those amount
which a minty cola is receiving and spending first recorded before entered into ledger book. The
main part of this books are cash, sales day book, purchase book, sales return and purchase return
and journal book. Accounting is the major aspect of business and has various advantages. It
provide information about various situations that a businesses possess to identify good and bad
financial condition of minty coal. Accounting record are vital for a business entity for future
reason like:
 It provide base of even practices to differentiate one results with another one.
 It help to increase volume of business outcome in huge number of transaction. It help to
eliminated necessity of identifying several transactions (Brusca and et. al., 2016).
1.2 Importance and meaning of financial concepts
Finance is most important sector that deal with the process of investment. It includes
various aspects of assets and liabilities under the condition of various level of uncertainty and
risk factors associated with minty cola. There are so many fundamental concepts use by
company in order to manager their funds. Like:
Accrual concept: It is said to be fundamental concept of accounting which is used to record
income when they are attained and not when they are received in cash and also recording of
expenses at the time when they are receive but not if they are paid.
Importance:
 It help in determining net profit of the company.
 It will assist in identify current expenses and actual profit at the specific time duration.
Going concern concept: It follow that principles which is based on assumption that minty cola
will remain in business for long time in future. it means the company will not stop their operation
and liquidity assets in closer term that means accounts are being prepared on going concern
basis.
Importance:
 According to this concepts, the fixed assets is treated as expenditure for that year.
 Under this depreciation is charged over fixed assets.
Business entity: It refer to be major accounting principles of accounting that explains that
business should be treated as separate entity form owners prospective or investor point of view.
Under this concept all activities and operations of minty cola are separately recorded from
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creditors, or other business concern. Doing so it require use of individual records for organisation
that exclude assets and liabilities of other entity (Claessens, Ghosh and Mihet, 2013).
Importance:
 Accounting system restricts recording of owner's transactions.
 Only firms expenses and profits are included and personal expenses are ignored.
Historical cost: It measure those value used in accounting under which price of property on
balance sheet are associated with nominal or real cost that are acquire by the company. It is the
value of those resources as liabilities incurred to purchase an product and services. In other term
it said to be balance among reliability and usefulness.
Importance :
 Depreciation affects the carried value of an assets on the statement of balance sheet.
 It will present data on fair value or market values.
Consistency concept: This principles explain that if any company adopted a accounting
principle therm they need to carry it in future accounting time. This concept said that there
should be proper balance and consistency in business so that desire outcome should be achieved.
Importance:
 It is used for the purpose of comparison that enables investor to take effective action.
Prudence concept: If company is following this concept then do not overestimate amount of
gain and underestimated the cost of expenses (Ellis, Haldane and Moshirian, 2014). One should
conservative in recording cost of assets without underestimating liabilities.
Importance:
 It will help in the valuation of assets which is based on historical costs.
Materiality: This concept explain that an accounting standard should be ignored if the impact is
very less on financial statements and it must be disclose by the company.
1.3: Evaluating those factors which influence the nature of minty cola
There are various factors of accounting system which are require to be evaluated before
making any decision preparation of financial statements. Minty cola have the choice of
transaction process accounting system and planning system that would help to analyse there
business growth and performance. It provide a computerised techniques of recording and keep
restoring transaction at daily, monthly and yearly basis. The objective of minty cola is fulfil
through analysing various factors:
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Compatibility with business: Function of accounting is depend upon nature of business and the
operation that are performed by the company. It has been observed that several company are
required other accounting system those are having different features. Regular function of minty
cola also influence the type of accounting system required to know that how the system are
working.
Perception: Employee and management how they are using accounting system in Minty cola to
influence its effectiveness and connection. Resistance in employee arise because of complex
system. Lack of management support can render the system related to decision making.
Level of training: After study of case scenario of minty cola company it has found that training
users are the key requirement of company. Objective of business can only be attained by proper
training provided to the employees. Lack of training in employees can lead to be huge problem
in supervising accounting system (Gras-Gil, Marin and Garcia, 2012).
Computerised accounting system: To maintain and keep accounting record it is important part
of managing and organisation. Small group can usually manage with simple book keeping
process but in case of minty cola they are large sum of money and more lengthy financial
transaction can create more problem but by using computerised system can easy off this
problem.
Manual accounting system: Before going into manual accounting system it is important for
company to understand basic difference among accounting data and reports. It also being
observed that most of the computerised system are based on manual principles. It is said to be
traditional concept of accounting to maintain record and business transactions.
Following are the relevant factors:
 System cost: Business system does possess inbuilt complexity if not maintain in right
manner it will affect the performance of Minty cola.
 Complexity of business process: As, the company is operated in soft drink sector. They
are having a problem that everyone is facing is related with accounting system.
 Data access need: Effective information related with company performance are required
to take valuable decision for further improvement.
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TASK 2
2.1 Different component of business risk
Business risk: It is said to be possibilities that minty cola have let down expected gain or
experience a huge loss rather than fetching a profit. It can be influence with various factors like
sales capacity, per unit price, cost of input and competition or government regulation.
Management of minty cola must understand the various types of risk that are associated with
company and have plan to avoid those risks. Some of them are:
Product risk: Company biggest risk is associated with subject matter of product and services
for sale to customers. Those offered product which consumer do not want will create big
negative impact on business in terms of financial and professional. If company are offering
faulty product for huge price create maximum risk in business (Hinkle and MayJiayi,. 2012).
Market risk: Every business will operate in an suitable economic marketplace that are having
certain boundaries and limitations. If Minty cola is not able to understand marketplace limit like
supply, demand, or price will lead to huge losses kind of situation for them. It can also be
important aspect of competitors those are associated with control of market share and gain new
place to enter into other market or industries.
Finance risk: Finance is the most important part of company to start new business or for the
expansion. As in case of minty cola company they are target and estimation of 5 million revenue
forecasting by observing the maximum forecasting from previous year. If planning is properly
done it will be easily achievable if but chance of risk is more because it based on the production
capacity and total sale done by the company during that particular year (Gras-Gil, Marin and
Garcia, 2012).
Execution risk: If Minty cola has new innovative idea that would satisfy customer need and
demand a bad execution of plan would lead to sink many opportunities for company growth and
development. It has found in case of minty cola that thing are not in proper manner will lead to
theft of cash and other aspects. So company have huge risk associated with execution of
effective ideas to protect those misconducts (Khlif and Samaha, 2014).
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2.2 Analysis of control system in place of minty cola.
Control system is used to manage, commands, directs or regulate attitude and behaviour
of system. There are various internal control system of an organisation that are being followed to
manage and control financial transactions. Process of complete internal system are:
 Ensuring cooperation with policies related with accounting system: Under this control
system company must ensure that internal and external factors are to be considered with
following related policies that are based on accounting system.
 Protecting organisation assets: Another importation aspect of internal control of minty
cola are based on controlling companies assets which are more important in future
business growth.
 Preparation of accurate and on time financial report: Under this method company must
provide accurate report on proper analysis of financial data.
The management control system provide a guide to design a framework structure to the
objectives for minty cola and different managers of frame, include so many control measure to
protect and support firm to attain its objectives. In many of the company the main objective of
the company is to maximise the profit with maintain standard performance estimation which
identified hot to design a set pattern or structure by implementing new strategies in the success of
plan. It all are require to achieve its set objectives which are already being planned by minty cola
in order to determine stability and performance. As senior manager of Minty cola company it is
prime objective it to identified and analyses those variation that are present in the way of success
of company. As control management is designed to created to gathered all data and information
those are related with planning and controlling operation of minty cola (Mironiuc, Robu and
Robu, 2012).
Internal control system:
 The control environment: It is set for a particular standard, process and structure which
is associated with common people. It is the primary base for internal control system in
Minty cola co. It consists of ethical code of conduct and emerges its staffs and operating
cycle.
 Risk assessment: The risk associated with Minty cola is ascertain so that firm need to
face difficulty to detect major issues.
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 Control activities: It is done in order to attain financial goals with the help of effective
control techniques.
 Monitoring: Effective and updated monitoring system should be available with the
company so that mistakes can be controlled.
2.3: Evaluate risk of fraud within Minty cola and method to detect fraud
Minty cola company has lose a certain amount of cash due to fraud. At and large scale the
impact of fraud can be minimise by the company. As it has found by senior manger that
employees have been reported stolen cash and stock of the company. A company should use
ongoing efforts to formulate such kind of environment under which possibilities of fraud is less
to happen. The risk of fraud can be arises in the absences of proper planning by management
system. Moreover, there are different tools and techniques available with minty cola to reduce
fraud and make an effective method to generate more gain as output. There are various factors
that are associated with fraud occur in business concern. Like:
Size of value: It is said to be that situation in which a goods are of high cost in proportion to their
size which is less risky to remove them form workplace. So has to be kept as important side and
method to protect them.
Method to control risk:
Alteration of duties: risk of fraud can be reduce if more employees are engaged at various
places of a particular transaction. Because most of fraud are happen in between two people so
separation of duties can lead to avoid less interactions among them so it will lead to reduce risk.
Safeguard: If assets are protected the chance of stolen is less. By applying certain computerised
data protection methods.
Documentation: If company is not maintain any kind of employee record then chance of
allocating identity of employees can be very much difficult for the company. So regular
recording of documentation is done of employees at the time of joining the business (Omoteso,
2012).
The various examples related with Minty cola case:
 Risk associated with stock theft and loss: It is important for the company to design a
perfect plan in order to determine its inventory losses.
 Loss of cash: For smooth conducting of business cash is required. The cash loss can be
found by manner of doing business in corrective ways.
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 Effective and efficient project management: The management of Minty cola need to
formulate their business operations in well planned manner so that future objectives can
be attain.
TASK 3
3.1: Plan a audit report as per scope, materiality and risk
Audit planning is very important for an organisation because it collects relevant proof
that are helpful in carry out business activities. It also aids in recording all costs that protect the
company from doing any mistakes with clients and reduces the chance of errors that may occur
while recording of transactions. While conducting audit planning, auditors of Minty cola has to
follow some steps which are related to scope, material and risk. In the knowledge of firm is
important to facilitate various scopes of audit like;
Identifying risk- For making audit planning, auditor should assess the risks that are imposed by
error or omission in financial statement. These mistakes, generally, arises mostly in those
transaction which are complex in nature.
Determining material level- A good auditor determines the standard benchmarking by which
financial stability can be handled easily. It is a professional judgement that are made by
auditor.
Obtaining sufficient understanding of internal control- A professional should evaluate the
internal risk and should identify the way by which it can be controlled.
Materiality-
Evaluators needs to give advise related to materiality which will determine its nature,
timing and extent of auditing process. It is a type of material if it will not be possess by company
then it will influence the economic decision of clients on the basis of financial data. So auditors
should set the standard for acceptable omissions so that material data are free from regime so that
it will not impact the decision of clients (Vidas and Moghadam, 2013).
Risk assessment-
In today competitive environment, everything is uncertain so before making an plan,
auditors should evaluate the risk that are associated with financial data. It is probability in nature
under which auditors takes inappropriate decision regarding data collection during that specific
period of time. Risks can be categorised in two ways which are-
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 Inherent risks- It is the probability that misstatement which are occurred in large
number of transactions and those are recorded and maintained in financial statement.
 Control risks- In this, recorded errors can not be identified which are written down in
financial statement. It aids in reducing fraud and other errors which may influence the
financial performance of Minty Cola.
3.2: Identify and make use of appropriate audit test
It refer to be that process which is performed by an auditor of to look after accuracy of
financial statements produce by the company during the particular year time. The main objective
for the test is allow auditor to collect appropriate evidence those are able to summarise
reasonable assurance that the financial statements are correct and not having any kind of
misstatement or errors. It is said to be that kind of process which are used by minty cola as
internal and external checking of accuracy and mistake that are done by company manager in its
financial statements. There are mainly two type of test that are being followed by auditor while
conducting proper test. One is substantives test and other one is test of internal control. By using
these two test company can gathered important decision about its main objective and establishing
checklist on proper results of audit questions. These are basically performed on simple basis on
current team of common or similar transactions (Vidas and Moghadam, 2013).
Substantive audit test: It is said to be direct test which is authorise as financial statements
equality. It need large amount of confirming, reformulation and testify. It test auditor of minty
cola wants to use substantive test then they need to go at the site location were inventories are
kept prepare certain report on the list of amount of stock stored by the company on that particular
areas and each of inventories list on sample basis. As internal audit done by the auditor to know
various information and data to analyse and provide correct result that company performance is
positive or going in negative way.
Test of details: In this type of test details misstatement of information and data are found in
financial system. It is done to identify control use of client by guest entity to detect substantial
errors. Auditor of the minty cola are mostly depend upon system of control as an integral part of
company those are performed under company. It is done to identify and realise internal control
operation like enquiry, observation etc.
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3.3: Audit process in proper manner
Audit Record is basically a process which symbolizes Minty cola firm that ensures that
its establishment should carry out the legal and political regularity requirements. The methods
provided a way by which there can be increase in the effectiveness in the collaboration aims and
objectives. There is similarity between the audit which is conducted by internal body or by
external body. The methods, techniques and procedures are similar for both. There can be
various records of audit processing that is used by this company for implementing their effective
control of financial information and statistics (Financial system audit. 2011).
Annual planning: In audit planning there is annual planning is carried out. This is
basically required for controlling fraud and misstatements. This is used for characterising the
nature of records that are kept in accounts of books. Using these technologies they can build a
method for protecting the record for a long time.
Planning Process: In carrying out audit report there is planning which is carried out. For
proper formation of a planning technique of each report there is a regular check of every
financial transaction that is performed by this company. There is a plan set by its management
system which is responsible for controlling the records that are later analysed for proper
completion of their financial year.
Performance: For proper conduction of performance in audit report there is maintaining
an operational activity which requires a procedure in which manager runs to verify and exercise
their special duties with respect to minty cola. This process actually involves many subjects that
needs to be evaluated very specifically and properly in terms of interviews with required
employees of this company (Anand and et.al., 2013). This can be achieved by doing a review of
documentation and reasoning of data by observation of various activities which is carried out.
TASK 4
4.1: Draft audit report
MINTY COLA COMAPNY
ABC
Crossword street, new south Wales
251/456-02560
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AUDIT REPORT
To Stockholders
Minty cola company
In visit of minty cola company on 31st December 2014 and related statements like balance sheet
and income statements and changes of equity constrain of stockholders and other statements
like cash flows for the year ended are being evaluated properly and related notes has been
prepared to the provided financial statements.
Objective of audit administration's
The management is responsible for making and evaluating proper presentation of financial
accounting system according to GAAP concepts in the united kingdom.
Role and responsibility
Auditor is responsible for delivering appropriate result after analysing proper statements of the
minty cola company. They need to follow proper guideline on the basis of GAAP concepts.
Under the guidance of auditor plan and strategies are formulated to get most appropriate
assurance about the financial system should be clean and not include any kind of errors and
misstatement. Under this project report audit covers all execution to process to get the audit
details about the amount and discloses under financial system. The procedures selected for
audit of data are rely mostly on the basis of audit decision-making.
View point
According to the opinion of the auditors the analysis relate with financial information are
express as fair and clean for further assistance. It will concluded that this report are having
some limitation that are covered easily by the auditors by applying various methods and tool. In
order to make financial statements more fair and effective they need to view every material
transactions during the time period.
Ford and peter
Lords, London
March, 12, 2015
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4.2: Suitable management letter
To the board of director
Minty cola company
Audit status and opinion
In order to review performance of Minty cola we have conducted the statutory auditing in
which no any evidence is collected which is affecting the performance of the company.
Independence and ethical standard
This particular report is prepared after making use of various laws and rule in order to remove
inconvenience system. The purpose of this report is to present complete new analyses of
company's financial statement which is free from any misconduct.
Overall Audit strategies
It has been plant structure as statutory audit of minty cola in which nothing is collected as legal
norms and laws relevant to the company. To avoid difficulty company has complied all the laws
and regulation to covered all the mistakes and errors. Under the report generally auditing
standards in command to asked the audit in most impressive manner.
Recommendation:
After going through every aspects of Minty cola, it has been found that there is transparency in
accounting system so that unethical conduct can be controlled. Apart from this, we have used
various auditing techniques to cover those mistakes and make a complete new results for the
company.
Thanks,
Ford and peter
CONCLUSION
From above mentioned project report it has been concluded that financial system is the
management of controlling audit the company financial transactions. Under this project various
auditing methods and concepts are being explained with their importance to businesses. Type of
audit test are being use to analysed the data of minty cola company and on that basis a audit
report is being prepared to the board of director.
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