FROM:EDDIE P. IRINCO & ALINE TEXTEIRAAudit Seniors SUBJECT:AUDIT PLAN
We have conducted an efficient and effective audit through adequate planning. Under ASA 300.5 (ISA 300.02) our audit team had thoroughly plan the work to enable the audit performed in an effective manner. Sealant Company Pty Ltd was assessed on two risks aspects, Business Risk and the level of Inherent Risk. BUSINESS RISK ASSESSMENT
The audit team had assessed Sealant Company Pty. Ltd on the basis of understanding its business and industry. Further, the audit team had identified and assessed risks of material misstatement based on the following factors; Account TypeAction Taken
The organization (Sealant Pty Ltd) and its business environment Obtained comprehensive information through; •Thorough knowledge of the business
•Methodological understanding of the audit team’s in terms of internal control. Audit Analysis•SWOT Analysis – The audit team had used SWOT Analysis in order to determined Sealant’s competitive situation by assessing its Strengths, Weaknesses, Environmental Opportunities, and Threats (Gay & Smith 2007). •PEST Analysis – The audit team had identified relevant factors on the business engagement of Sealant. The company’s relationship between the industry and the broad economic and its business environment. Assessment Classification•The Audit focus on high risk as the major determination of the business risk.
1. Credit sales cycle and trade receivables
It is considered a high inherent risk at assertion level for the fact that the processing errors are only partially mitigated by the sales manager and credit controller. 2. Cash receipts and payments
Sealant Ltd shows low inherent risk in terms of staff integrity when it comes to cash receipts and payments, however when the exchanged currency is put into analysis, inherent risk is increased because of the rate gains and losses resulting from this practice....