AUDIT INVESTIGATION |
Individual assignmentLecturer: Ms. NABILAH BINTI AZAHARIDONE by: KELVIN FAUSTIN SANGAWEHand in Date: 27th APRIL 2016 |
Table of Contents
Qn1. (a) Substantive procedures 2
TRADE PAYABLES AND ACCRUALS 2
SOURCES OF INFORMATION 3
The previous year Cherry Blossom’s audit file 3
The Cherry Blossom’s Management 3
Permanent Cherry Blossom’s Audit file 3
Cherry Blossom’s Website 3
Cherry Blossom’s Competitors financial statements 4
Audit risks and Auditors responses 4
The factors the finance director should consider before establishing an internal audit department. 6
WEAKNESSES IN THE SALES ...view middle of the document...
* The receivables ledger should be checked so as to find any possible mispostings where this could be the reason for Sakura’s trade receivables have historically been low.
* For Sakura’s responses with differences the senior should make the identifications of any disputed amounts and do the identification whether they relate to timing difference or if they are possible errors of Sakura’s records.
* Any distinctions because of timing such as cash in transit, ought to be consented to post year-end trade receipts in the cash book.
* In the event that any equalizations have been hailed as questioned by the receivable, then these ought to be talked about with Sakura’s management to recognize whether a record is essential.
* Make a review on the announcement to the shareholders in late October, so as to confirm if this was announced before the end of the year.
* Audit the expenditure to confirm that there are no retraining costs included.
* Cast the breakdown of the reorganization provision to ensure correctly calculated.
* For the costs included within the reorganization, as for the supporting documents so as to confirm the validity of the items included.
* Get a written representation confirming management discussion in connection to the declaration of the reorganization.
SOURCES OF INFORMATION
The previous year Cherry Blossom’s audit file
This will give us the report of the previous year auditing where it will show the issues arose in the previous year’s auditing and also what was brought forward for consideration for this year’s audit (if any).
The Cherry Blossom’s Management
Its very important to discuss with the management its self so as to gain more information about the company. This information includes the important issues that have arisen or any changes the company had during the current auditing year.
Permanent Cherry Blossom’s Audit file
The permanent company’s audit file will then give us data in connection to matters of proceeding with significance for the organization and the audit team such as statutory books information or important agreements.
Cherry Blossom’s Website
The website will show us the recent press releases the company has provided on the background on the changes they had on the business during the were this could lead to possible additional audit risks.
Cherry Blossom’s Competitors financial statements
Here we will obtain information in relation to the competitors financial results and their accounting policies where we can use this information to asses Cherry Blossom’s performance in the year and also when undertaking going concern review.
Audit risks and Auditors responses
i) Audit risk
Cherry blossom has borrowed 1.5 million from the bank via 5year loan, where the loan needs to be split up so as to obtain the current and non- current liabilities
When auditing the team would need to affirm that the €1·5m loan...