In the next section, the report identifies the tests of controls to be performed for obtaining sufficient appropriate audit evidence in relation to purchases made during a year. Lastly, the report discusses the substantive procedures, which are to be carried out for the purpose of obtaining reasonable assurance as to the reliability and correctness of the information pertaining to inventory in the financial statements of the company. A. Key Business Risks, Possible Consequences and Risk Mitigating Strategies Since the company is going through a declining phase as far as profitability and sales turnover is concerned, it is pertinent to consider areas which require management’s attention. The increase in the employee turnover rate and the fact that there are few experienced professionals left in the accounts department of the company pose significant risks in relation to the operations of the company and the preparation and presentation of financial statements which are free from material misstatements. Apart from this, the increase in competitors of the business also poses a significant threat in future. All these risks can act together to result in a risk related to going concern of the business. From an auditor’s professional skepticism point of view, these risks and developments can have serious implications on the financial reporting and internal controls maintained by the company, since there is a possibility that management may try to manage earnings and overstate the sales revenue and profits of the business. In addition to this, greater employee turnover reflects that there is a continuous inflow of new inexperienced employees who are expected to be less aware of the procedures and practices followed in the company. Moreover, the company’s automated purchase management system is also regarded by the employees as inefficient due to the complexities and lack of user friendliness and hence the transactions are often recorded manually in the system. This manual practice of recording transactions is another area where fraudulent activities may take place and intentional misstatements may be made by the personnel responsible for data entry. Moreover, there are only two persons in the organization who possess skills to operate the system. Lastly, the composition of the board is also an area of concern; there are different affiliations of board members and there is a risk that the members may have some conflict of interest which may promote unethical practices (Rittenberg, Johnstone and Gramling 2011). Keeping in view these risks and their possible consequences, the company can take several steps to mitigate these areas and overcome these loopholes. First of all, there shall be appropriate measures taken to ensure that employee turnover is brought down to a minimal level in order to ensure that experienced and professional staff members are working in the company and therefore the function of financial reporting, in particular, runs smoothly. On the other hand, there should be a resolution passed for the disclosure of director’s interest in Sucre Delights Limited and other companies, so as to identify and counter any conflicts of interest. The automated system shall be made more user friendly so that the users are able to run the system easily and are inclined to use it. Moreover, the fact that there are only two
Report To: Jean-Pierre Christophe CEO, SUCRE DELIGHTS LTD From: Manager Date: 23 May 2012 Subject: Audit and Internal Control Issues - Sucre Delights Limited Keeping in view the weaknesses in the internal control and management practices in relation to maintaining effective internal control, different areas of concerns are discussed in this report…
Academic research is research done for a scholarly purpose only and it is not client-oriented; it is intended for theoretical or speculative purposes and does not have a practical intent or benefit. Accounting is imbued with a public interest and must serve the public interest first because it is put in a position of trust.
The study is all about Tesco Plc. UK retail market is highly competitive as several leading organizations are competing with each other. Tesco is one of the leading global retail chains. Tesco has implemented several unique strategies to secure market share and maintain continuous business growth.
Global recession during 2007 to 2009 has substantial impact on the overall retail industry across the world. The external environment determines the outlook of industry and hence it is very important to analyze the external environment in order to formulate appropriate strategy for the organization.
It involves a wide variety of disorders, injuries and local manifestations of systemic conditions. Podiatric management could be in a form of curative, preventative or long-term palliation or health education (Health Care Programmes, n.d.).
Podiatric management is predicated on accurate assessment and diagnosis that leads to the implementation of an appropriate management plan.
??s internal strengths include employee loyalty, which is has been realized through a unique organization culture that is centered on motivation and passion to develop new products with no restrictions with support from strong work ethics. Market and product diversification is
Interestingly, the pursuit for the achievement of each of the specific objectives that were set have come together to form a strong basis for learning. In effect, the module has been a learning experience, based on which several
The following are the recommendations as to how control process is able to improve the overall effectiveness of an organization.
A manager should keep the communication lines open. Highly performing teams are often built on a strong
Planning helps the auditor to identify and devote the necessary attention to areas of importance, identify and resolve time related problems and more importantly organize and manage the audit engagement in an effective and efficient way
The managers have full information about the company and the mangers focuses on the short term goal rather than long term goals of the organization.
The main purpose of reducing the agency theory is that the theory states that
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