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auditing - Case Study Example
Finance & Accounting
Pages 7 (1757 words)
Date Auditing Stagecoach Company is among the leading transport companies in the United Kingdom. The company is a quoted company and that means that it has to publish its financial reports on an annual basis. The reports are usually published so that the stakeholders of the company can use them…
Overstating of revenues and the understating of expenses Revenues can be overstated so as to show that the company is doing well and that would attract new shareholders. The shareholders would be attracted by the increased revenues and that would imply that they would also get more dividends from the company because of the god performance of the company. The understating of expenses will mean that the profits of the company will increase and that will be appealing to the shareholders of the company (Kara and David, 178). The above facts will make the area of revenues and expenses more risky because the areas will have a direct effect on the shareholders decision concerning investment decisions. The auditor should carry out all the required procedures to ensure that the financial statements of the company reflect a true and fair view and the information will be useful for the shareholders and other company stakeholders. From the financial statements of the company, the operating income from sales has increased from 175.80 in 2011 to 197.40 in 2012. The increase in income is consistent with the increase in the previous years. However, that should not be the case because the margin of increase of tax is more than the other years, which are 33.30 in 2011 to 51.50 in 2012. ...
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