Audit of Panera Bread Company Quality Service and Market Share Process - Research Paper Example

This is because, few customers subscribe to this company and, therefore, the expenses incurred by the company compared to the revenue generated from the services rendered is relatively high. In order to decrease its liabilities, and hence portray a positive image of the company, managers may attempt to take the losses into a different account especially the expenses accounts. In addition, when customers are disappointed in the orders they make, there is a higher possibility of them demanding that their order be remade or refunded.

This environment provides the possibility of pilfering by employees as they can always say they had to remake an order with no hint of plausibility. Increased customer returns and higher rates of pilfering by the employees increases the costs of goods sold by the company. Another risk is that Panera Bread is in the provision of services it offers on a national, regional, and local level, and this reduces its revenues and market share. When customers get poor services, it increases their chances of shifting to another competing company offering the same services.

This reduces the amount of revenue and the company incurs expenses such as, in advertising and improving its services to be better than those offered by their competitors. However, the company must make sure not to increase its prices since the customers will again shift to the competing companies. Since advertising is necessary, the managers then tend to hide the expenses behind the advertising expense in the statement of account. Controls To alleviate the risks coming from poor services, Panera Bread should put into practice several controls.

The company, to alleviate the risk of accounts payable being understated, as a result of increased expenses and, therefore, managers resulting to understating the expenses, should require proper authorisation of orders and entry of these orders in its ledger. The company should establish regular receipt book control, and ledger book to help reduce the irregularities. In a bid to entice customers, advertising is done. A control on this should also be enacted where the company should ensure that there are supporting documents any time a manager books an advertising expense.

It should also provide an appropriate division of duties such that a manager does not fake any advertising expenses. The company, to deal with the risks of losing its customers, can offer differentiated services from those that it normally offers. This can be done through, introducing offers, for example, ‘buy one get two’. Also, the maintenance of a serene environment can also be an advantage. This increases the influx of customers thereby solving the problem of managers faking expenses to reduce the liabilities since the revenue will increase in the long run.

Audit Objectives During this audit, I plan to test the accuracy and the valuation of the contingent liability for losses associated with poor services, the completeness of purchases and accounts payable and the existence of advertising expenses. Risk Assessment As a result, many emerging enterprises, especially in the food service industry, restaurants are always searching for ways of increasing their profits: Therefore, I assessed natural risk throughout all financial assertions. Moreover, the contingent liability is an estimation and, therefore, at a high risk of manipulation by the managers.

The controls around the accounts payable