A.Inventory balances and purchases transactions5
B.Trade receivables and credit sales system5
C.Property, Plant and equipment (PPE)6
D.Trade payables transactions and balances6
A.Inventory balances and purchases transactions8
B.Trade receivables and credit sales system.10
C.Property, Plant and equipment (PPE)12
D.Trade payables transactions and balances15
Conclusion The following conclusions have been drawn out with regards to each segment19 A.Inventory balances and purchases transactions19
B.Trade receivables and credit sales system.19
C.Property, Plant and equipment (PPE)19
D.Trade payables transactions and balances19
A.Inventory balances and purchases transactions21
B.Trade receivables and credit sales system.21
C.Property, Plant and equipment (PPE)21
D.Trade payables transactions and balances21
This report is for Wendig Ltd for the year ended July 2010. The report is focused on highlighting significant audit risks, Key assertions and relevant internal controls concerning various segments of the business namely Inventory balances and purchases transactions, Trade Receivables and Credit Sale System, Property Plant and equipment, Trade payables transactions and balances. The report in the end suggests relevant recommendations for each of the following.
The company has fairly voluminous purchase transactions. The company overcomes the inherent problems of obsolescence and overstocking by tight inventory control. However, The inventory is vulnerable to theft thereby reducing the overall reliability of internal control in terms of faithful representation and undermines quality of operations. Also unrestricted access to warehouse further increases risk.
The company has numerous sales transactions. The company is facing fierce international competition and on top of that poor economic conditions has caused several customers to demand extension to their credit. This rings warning bells over the company to work out and strengthen their policies and procedures on giving and recovering credit.
The company manufactures Property, Plant and Equipment (PPE) in-house. Also, there has been a significant decrease in PPE repairs and maintenance expenses since past two years. This indicates misappropriation of repairs and maintenance expenses. This reflects weak internal control. This may lead to not only unreliable financials but also compliance issues.
The company has high volume of trade payables and the procedure to pay is to record them in a request form and pay off them by cash disbursement system. There are high chances of omitting payables thereby causing severe consequences in future. Also, The Company hired a new employee who is unfamiliar with the procedures and policies thereby increasing the risk.
In fulfilling this case study, the group relied on ASA standards applicable, namely ASA 315/ISA 315 Identifying and Assessing Risks of Material Misstatement Through Understanding the Entity and its Environment, especially the key assertions (ASA 315.A111)
The group also used the textbooks Auditing and Assurance Services in Australia by Gay and Simnett and Essentials of Auditing, Assurance Services and Ethics in Australia by Arens, et al. as valuable sources of information.
This case study is limited only to Wendig Limited and focuses its discussion on the information given about findings in Case Studies in Auditing and Assurance by Roebuck and Martinov-Bennie.
In this Case Study, we as a team of senior auditors are given a responsibility of giving an audit opinion on Wendig Limited. Following the Audit process model, we have commenced planning for the 2010 audit report.
During the planning stage, we have come across information...