As we have mentioned in introduction, Harvey Norman (ASX. HVN) is a giant company, business cover Australia nationally, Asia in Singapore, Malaysia and Europe- Ireland. Core business specialized in retailing & franchising, in areas of electrical, computer, furniture, entertainment, bedding goods. In this part of assignment, we aimed to find out some non-quantitative factors that might leads to potential misstatement, which eventually overstated or understated specific accounts that shown in profit and loss or balance sheet.
Disappointed sales figure in Ireland and north Ireland
The economy condition in Ireland & north Ireland had stepping into recession, due to global financial crisis, has given Harvey Norman’s business that owned or franchised in Ireland a massive drop in sales. Hence that unsold stock will be remaining at a high level. According the business nature of Harvey Norman, part of it business sells electric good, which highly related to technology, and most importantly technology are growing in extremely fast pace. Therefore when this financial year ended, stock that record in inventory might not value the same as new release and we are strongly suspected that there will be potential misstatement within inventory account. Under an assumption that current technology or inventory is decreasing in value every season, figure that shown in balance sheet (inventory) may not be updated fast enough, hence potential misstatement existed. In this case inventory account has been directly affected. http://www.smartcompany.com.au/retail/20091001-harvey-norman-optimistic-despite-trading-loss.html 2.
As discussed earlier, Harvey Norman is a Australia based company, business cover globally, in process of annual report, auditors have to conclude number figure into Australia dollar as reported currency. In this case, PP& E account or Revenue account (overseas part) could have possibly affected by potential misstated. As we all know...
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