Fraud And Errors of the Companys Financial Statement
Fraud And Errors of the Companys Financial Statement - Case Study Example
Nobody downloaded yet
Extract of sample Fraud And Errors of the Companys Financial Statement
Finally, the detection risk which analyses the risk that auditors’ procedures would fail to detect a material error (Hall, 2013, pp. 691).
Accsys Technology PLC is a chemical technology group quoted on the Alternative Investment Market (AIM) on the UK stock exchange. It develops and commercialises a range of transformational technologies that are based on the acetylating of wooden elements, such as particles, wood chips and fibres, and solid use for us as a leading, environmentally sustainable, construction materials. Analysis of the company’s most recent financial statements indicates some anomalies that need further investigations. These areas include revenue, gross profits, and remuneration whose balances show a large positive difference in 2014 as compared to 2013.
Material misstatements in the financial statements are often as a result of an overstatement or understatement of revenues. It is crucial for auditors to presume that there are risks in revenue recognition. From the quantitative analysis (Appendix 1) it is clear that the company’s total revenue had materially increased by 78% in 2014 as compared to that reported in the year 2013. According to the financial director, the increase had been attributed to a 61% increase in Acoya revenue because of an increase in sales to Medite. This increase in sales to Medite is because the company had finished its built up stock which it was still utilizing earlier. There was also an increase in license income from Solvay and other revenues such as the sale of acetic acid. According to the financial statements, the increase in total revenue was as a result of an increase in revenues in the UK and Ireland by 183.70% (Appendix 2). This was further explained by an increase in revenue generated from one customer who represented 43% of this revenue and exceeded 10% of the group’s revenue. This area creates an audit risk because in 2013 the revenue generated from a customer did not exceed 10% of the Group’s revenue.
This paper "Fraud And Errors of the Company’s Financial Statement" focuses on audit risk - the risk that the auditor expresses an inappropriate opinion because of intentional miscalculations like fraud and errors of the company’s financial statement. Identifying and assessing this risk is crucial in the audit process. …
Auditors are to certify the effectiveness of internal controls of an entity wherein they conducted audit, have to keep records, to advise management and so on. With regard to SAS # 82, auditors are responsible to plan and execute the audit in order to have reasonable assurance regarding availability of financial statement free from misstatement.
Currently the company is in a process of expanding the products it offers by making different types of shoes that meet different markets demands. For example the company is in the process of manufacturing PHONESHOES that are specifically designed for helping business executives to carry out their operation more efficiently and effectively (Timothy, Loretta, & Kenneth, 2011).
The reports revealed the facts that the company scheduled smuggled money as sales from foreign banks. The reports misrepresented the true value of accounts payable to creditors. The inventory was overstated and the audit reports were doctored. The company’s accounting policy recognized sales returns by crediting the respective amount and at the same time it also counted it as inventory.
Such financial statements that are crucial to an organizations accounts department include the balance sheet, the cash flow statements, profit and loss accounts, and the trial balance (Schrader & Toner, 2013). However, the process is not always rosy as sometimes it is marred with fraudulent incidences of all sorts with the most prevalent being the revenue recognition fraud.
Nevertheless, many corporates and business leaders have been neglecting these standards thus propagating financial frauds (Pinkasovitch 1). Ideally, the increased use of technology plays a significant role in fostering fraudulent activities in the global market where criminals can now commit wide range and complex financial crimes.
They have asked that you make particular reference to HR systems and controls in your report.
The increase of complexity of organizational activities worldwide has led to the limitation of the effectiveness of the measures taken for the control of
The author provides the following accounting principle. The matching principle requires firms to apply the accrual basis of accounting where expenses are matched with revenues. For example, the wages of an employee should be reported in the week that the employee worked and not when the employee was paid.
Before I can make an analysis of the intellectual capital for Microsoft Inc., there are some crucial factors that need to be put forward. It is very imperative to point out that intellectual capital is nothing but a combination of skills,
7 pages (1750 words)Essay
Hire a pro to write a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Apply my DISCOUNT
Got a tricky question? Receive an answer from students like you!Try us!
Let us find you another Case Study on topic Fraud And Errors of the Companys Financial Statement for FREE!