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3.1. Planned audit with reference to scope, materiality and risk
Audit planning is defined as the process in which the strategy is designed to conduct the
expected result which also defines the scope of audit inside the company. The size, nature and
the time for the audit plan may vary. It depends on the size of the business. If the business is
spread to the large scale, the strategy making and its implementation will take more time and also
the overall scope of Audit plan may also increase. It’s basically the step by step methodology
where the audit in control reviews the financial process and the internal environment along with
the engagement preparation !eady !atio, "#$%&
Audit planning is fairly important since the aim of doing it is to make the error free of financial
statement as well as ensuring the time for reviewing or cross checking financial events' lesser
time in correcting accounts with different planning methods used to determine risk, internal
controls assessment, etc(.
a. Scope
An audit should have a clear scope that focuses its extent, timing and nature as well as
selected issues on the basis of their relevance to the audit ability.
)uring the early planning stages, the appointment activity to be audited is often defined in
broad terms. *ery seldom is it practical or cost+effective to audit everything. coping the
audit involves narrowing the audit to relatively few matters of significance pertaining to the
audit ob-ective, that can be audited with the resources available and that are critical to the
achievement of the intended results of the activity being audited Anon., "##&
/urton 0ousing should determine the review1s audit planning scope as it needs to include
examination of all activities related. The responsibilities of /urton 0ousing auditor are to
determine the performance risks and also financial statements audit risk. The three risks are
inherent risk, control risk, and detection risk.
b. Audit risk
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Audit risk is the risk that auditors may give an inappropriate opinion on the financial
statements. There are three components of audit risk including inherent risk, control risk and
detection risk. /22, "##%&
Inherent risk
The susceptibility of an assertion about a class of transaction, account balance or disclosure
to a misstatement that could be material, either individually or when aggregated with other
misstatements, before consideration of any related controls 3azal, "#$$&. There two main
types of factors which are factors affecting client as a whole and factors affecting individual
account balances or transactions.
Factors affecting client as a whole
In the case of /urton 0ousing, the factor which can affect to the firm is the state of
the economy since the general level of economic growth can determine the profit as
well as the company performance due to the changes in customer demands as well as
inflation, technology, etc(.
The second is the competitiveness and industry factors since /urton 0ousing is small
charity and housing association which principal assets contains a restaurant,
accommodation for 4# young people and recreational facilities according to thescenario. The number of competitors in this field of industry is 5uite any and also
because of the size of the firm, /urton 0ousing needs to compete with many firms.
Factors affecting individual account balances or transactions
6ntering amount of invoice in ledgers is a risk that /urton 0ousing needs to
determine since accounting system cannot check on its own whether the amount of
invoice in the ledgers entering is correct or not. As the result, the risk of /urton
0ousing making mistakes when entering the values is available and if there is no
control made in order to eliminate the fault then the financial statement will be
affected due to wrong financial information.
7ther risk can be thief or fraud. In the scenario' rents are received from residents by
reception staff that is independent of the housing manager and bookkeeper then the
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rent will be given to the bookkeeper by the staff. The problems can arise with such
process since the amount rent paid can be cheated by the employees by increase the
expenditure and amount of rent needed to be paid by customers or stealing rent paid
as cash is easier to divert than checks or credit card payments.
Control risk
The risk that a misstatement that could occur in an assertion about a class of transaction,
account balance or disclosure and that could be material, either individually or when
aggregated with other misstatements, will not be prevented, or detected and corrected, on a
timely basis by the entity’s internal control 3azal, "#$$&
According to the scenario, with /urton 0ousing, the charity is controlled by a management
committee which comprises the voluntary chairman and treasurer and other voluntary
members elected annually. 0owever day+to+day management is by a chief executive whomanages the full+time staff who performs accounting, cleaning, maintenance, housing
management and other functions. It is a risk as the risk of controlling over the company
operating system since the top manager will be lack of acknowledgment of the company
operation' affect the financial matters of /urton 0ousing.
Another risk /urton 0ousing might have to face with over its human resource as according
to the scenario the restaurant comprises the manager and four staff, who prepare and sell food
to residents and other individuals. The number of staff is low as when there is problem occur
such as a staff need day off because of sickness, /urton 0ousing will have difficulty in
covering the absent staff workload as well as not having enough experience of the -ob.3urthermore, segregation of duties is also a risk to /urton 0ousing as with /urton 0ousing
systems for purchasing food, the restaurant manager orders the food by sending an order to
the supplier' the food received is checked by the restaurant manager and then authorizes
purchase invoice, confirming the food has been received. The risk of this system is that the
person who re5uests order of fittings for ships shouldn’t be the person who authorizes the
re5uest. 8oughran, n.d&. This could lead to the excess or unnecessary amount of order
re5uests. 7n the other hand, /urton 0ousing should also have different employee to keep
files of related purchase orders and paid invoices.
/urton 0ousing needs to determine with the matter of ade5uate documents and records also
since cash takings from the restaurant are recorded on a till and each day’s takings are given
to the bookkeepers who records and pays them into the bank. )etails of cash takings are
recorded on the till roll. /urton 0ousing needs to remain source documents like purchase
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orders, paid invoices, and customer invoices in a proper filing system to be able to correct the
financial records as if there are problems occur like missing invoice number with no void
information.
etection risk
According to the International Auditing tandards IAs&, detection risk is the risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not
detect a misstatement that exists and that could be material, either individually or when
aggregated with other misstatements 3azal, "#$$&. As the matter of fact, detection risk is the
risk that material misstatements will escape auditor’s procedures which has been applied to
detect material misstatements. ince the risk of material misstatement has two components
including inherent risk and control risk and if inherent and control risk is high, it will be the
same to the risk of material misstatement while detection risk will increase if the risk of
material misstatement increases.
As the result the risk of detection risk will goes up according to the inherent and control risk
and in the case of /urton 0ousing, since the firm inherent risk and control risk is 5uite high,
the detection risk of /urton 0ousing is also at a disturbing amount. This could leads to the
increase of increased of business risk as it will affect the performance of /urton 0ousing
business. The firm auditor needs to take more responsibility to reduce the risk to an
acceptably low level by applying suitable audit procedures to be able to have exact and fair
financial information to the financial statement.c. Materiality
9ateriality is an expression of the relative significance or importance of a particular matter in
the context of financial statements as a whole, or of individual financial statements. A matter
is material if its omission or misstatement would reasonably influence the decisions of an
address of the auditors’ report /22, "##%&
/elow is the information on the company1s financial performance according to the scenario:
!"#!
Forecast
$"""
!"#1
%ctual
$"""
ervice !evenue %4,;"< %#,
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+ I will ensure that cash from residents is correct by asking depositbill sent from
bookkeeperin the bank + I will ensure that cash from residents is correct by asking residentsabout receiptof
payment
+ I will ensure that number on sales ledger is correct by asking bookkeeper the numbers of received cash in all rooms for rent with numbers of void room
+ I will ensure that cash from residents is correct by looking at the instruction activity of
reception staff with residents
+ I will ensure that cash from residents is correct by asking bookkeeper about cash posted
to sales ledger for a residents+ I will ensure that the payables ledger is correct by asking bookkeeper number on
purchase invoice
+ I will ensure that the payables ledger is correct by asking the supplier ordersfrom
restaurant+ I will ensure that purchase invoices are authorized by checkingsamples of purchase
invoice and the signature of manager
+ I will ensure that payable invoices is correct by askingwaiters sold food and inventory
food
! (ubstantive procedure
Substantive procedures are intended to create evidence that an auditor
assembles to support the assertion that there are no material
misstatements in regard to the completeness, validity, and accuracy of
the nancial records of an entity. Thus, substantive procedures are
performed by an auditor to detect whether there are any material
misstatements in accounting transactions (Cardine, 2013).
1 Test of details of classes of transaction, account balances, and
disclosuresIn the case of /urton housing, by using substantive procedure, there are some activities:+ I will confirm cash from residents of cash book by depositbill of the bank + I will confirm receivable accounts of residents account by receivable bills from
reception staffs
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+ I will confirm management regarding the collectability of customer accounts by
receivable bills from reception staffs+ I will confirm receivable accounts of residents account by customer orders to invoices
billed from reception staffs
+ I will confirm receivable accounts of cask book by invoices billed from receptionstaffs
+ I will confirm void rooms on of report to management committee by customer orders
from reception staffs
+ I will confirm inventory of food by customer orders from reception staffs and
purchase invoice+ I will confirm purchase invoice of food by inventory of food and sold food from
waiters
+ I will confirm purchase invoice of food by payable invoices from suppliers
+ I will confirm payable accounts of sales ledger by signed che5ues from the chief executive
2 Substantive analytical procedure
!"#!
Forecast
$"""
!"#1 %ctual
$"""
)ariances
!evenue %4,;"< %#,#
)istribution costs ",4##& ",4##& #
@et profit %> $,;> $,"4
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Financial Statement extracts
=ash and bank 4## $,4;# $,#;#
Table: The variances in financial performance of Burton ousing
As we can see the table above:
The amount of revenue as well as gross profit forecasting and actual is 5uite different. The net
profit is four times larger than expected. This number was due to the decrease in the cost of sale
and administration costs of the actual amount.
3.3
1. Documentary of audit process:
Audit working paper:
De!nition: Audit working papers contain information from accounting and
statistica" records, persona" o#ser$ations, t%e resu"ts of inter$iews and
in&uiries, and ot%er a$ai"a#"e sources. Audit working papers may a"so
inc"ude contract #riefs, copies of correspondence, e'cerpts from corporate
minutes, organiation c%arts, copies of written po"icies and procedures,
and ot%er su#stantiating documentation (*+, 2013)
orma""y, audit working paper is di$ided into 2 main types:a. *ermanent !"e:
-%e permanent !"e on eac% contractor is a centra" repository ofinformation gat%ered during t%e course of an audit w%ic% %as continuing
$a"ue and use to su#se&uent audits e'pected to #e performed at t%e same
contractor. *ermanent !"es are usefu" in preparing t%e audit program and
in determining t%e appropriate scope of su#se&uent audits. -%ey a"so
pro$ide ready means for auditors to #ecome fami"iar wit% t%e contractors
operations and any e'isting audit pro#"ems or contractor system
weaknesses. /%i"e summary information on t%e contractors organiation,
!nancia" structure and po"icies may sometimes #e inc"uded in permanent
!"es for sma""er contractors, suc% information on "arge contractors wit%
continuing audit acti$ity is genera""y maintained in t%e !e"d audit oce att%e centra" reference "i#rary (*+, 2013)
-%ere are kinds of matters w%ic% are in$o"$ed in permanent !"e. t
com#ines: nformation of companys nature, %istory, p"ace of production 4emorandum of association Artic"e of association5s copies Content "ist of a"" important #ooks of company.
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6ist of working c%arts *%oto copy of a"" directions of emp"oyers *re$ious years a7cs audit report 6ist of a"" reports re"ating inter$a" audit or inter$a" inspections
(*rof. 8inod 9umar, 200)#. Current !"e:
-%e current !"e usua""y consists of working papers w%ic% %a$e "imited useon future assignments. DCAA orms ; a, #, and c are t%e Agency
wide /orking *aper nde'es and pro$ide a concise summary of items
genera""y found in audit working papers (*+, 2013).orma""y, current !"e com#ines ; kinds of matters w%ic% are:
Audit and audit programs copies C"earance t%e pro#"ems and confusion during t%e time of audit work Copies of annua" records "ike trade a7cs and pro!t and "oss account
and #a"ance s%eet ?ank reconci"iation statement *aper of ca"cu"ation of ta' #onus.
6ist of "ost proofs *aper regarding stock e$a"uation
(*rof. 8inod 9umar, 200)c. App"ication:
C"ient: @estaurantu#Bect: Auditors
ear end: 201=*repared #y: -racy@e$iewed #y: 4r. un A"eBo ?at%an
+#Becti$es -o ensure t%e purc%ase "edger #a"ance fair"y/ork done • C%eck t%e information of restaurant and
its manager to get t%e sc%edu"es ofordering foods and time recei$ed
• C%eck t%e information as we"" as t%e
transactions of de"i$ering foods of
supp"ier.
• Compare t%e information and t%e data in
purc%ase "edger of #ot% restaurant and
supp"ier.@esu"t -%eres a kind of foods %a$ing some diEerent
#rands w%ic% were not ordered #y restaurant
manager #ut t%eir &ua"ity and con!rm are goodso it can #e accepted.Conc"usion /eig%ing up a"" to t%e conc"usion, t%e purc%ase
"edger are fair"y stated and some sma""
mistakes can easi"y #e impro$ed in t%e ne't
turn.
2. Accounting and contro" system
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a. "owc%artA Fowc%art is a forma"ied grap%ic representation of a "ogic se&uence,
work or manufacturing process, organiation c%art, or simi"ar forma"ied
structure. -%e purpose of a Fow c%art is to pro$ide peop"e wit% a common
"anguage or reference point w%en dea"ing wit% a proBect or process
(@ouse, 200).According to t%e scenario, ?urton Gousing system for purc%asing food
comprises H steps:i. -%e restaurant manager orders t%e food #y sending an order to t%e
supp"ierii. -%e food recei$ed is c%ecked #y t%e restaurant manager.iii. -%e restaurant manager aut%ories purc%ase in$oice, con!rming
t%e food %as #een recei$ed.i$. -%e #ookkeeper posts t%e purc%ase in$oices to t%e paya#"es "edger.$. -%e #ookkeeper makes out t%e c%e&ues to pay t%e supp"iers, w%ic%
t%e c%ief e'ecuti$e signs. -%e c%e&ues are posted to t%e paya#"es
"edger and cas% #ook.A"" H steps a#o$e wi"" #e demonstrated #y Fowc%art to %e"p manager and
#ookkeeper easi"y fo""ow and keep pace wit% t%e system of t%e restaurant.
*urc%a
se
2
1
n$oic
Ca 1
C%e&ue"
*aya#"e
6edger
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#. arrati$e notesarrati$e notes %a$e t%e ad$antages of #eing simp"e to record. -%e
purpose of narrati$e notes is to descri#e and e'p"ain t%e system (?**,
2010). arrati$e notes are usua""y used for supporting Fowc%art to c"arify
more t%e stages and systems of auditing.orma""y, to create a narrati$e notes, it must #e #ased on H &uestions:
/%at functions are performed and #y w%omI /%at documents are usedI /%ere do t%e documents originate and w%at is t%eir destinationI /%at se&uences are retained documented !"ed inI /%at #ooks are kept and w%ereI
(?**, 2010)
o. Acti$ities Done #y @eference1 -%e restaurant manager
orders t%e food #y sending
an order to t%e supp"ier
-%e manager /orking paper
2 -%e food recei$ed is
c%ecked #y t%e restaurant
manager.
-%e manager /orking paper
3 -%e restaurant manager
aut%ories purc%ase
in$oice, con!rming t%e
food %as #een recei$ed.
-%e manager /orking paper
= -%e #ookkeeper posts t%e -%e /orking paper
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purc%ase in$oices to t%e
paya#"es "edger.
#ookkeeper
H -%e #ookkeeper makes out
t%e c%e&ues to pay t%e
supp"iers, w%ic% t%e c%ief
e'ecuti$e signs. -%ec%e&ues are posted to t%e
paya#"es "edger and cas%
#ook.
-%e
#ookkeeper
/orking paper
c. Juestionnaires nterna" Contro" Juestionnaires:
nterna" Contro" Juestionnaires (CJs) are used to c%eck w%et%er a
particu"ar contro" e'ists or not to detect or pre$ent and correcting a
materia" misstatement (or simp"y misstatement) at an assertion
"e$e". n simp"e words CJs are used to appraise t%e design of t%e
interna" contro" system. And if a certain contro" is not present,w%ic% in auditors opinion was necessary, it represents a de!ciency
in t%e interna" contro" system (aa", 2011). n CJs, peop"e must
answer t%e &uestion #ased on t%e form of es7o &uestion. f t%e
answer is o, t%ey must oEer t%e impro$ement or so"ution for t%at
matter in recommendation.?e"ow are some standard &uestions w%ic% wi"" #e designed in t%e
CJs
Juestion es o @ecommendationAre written departmenta"
accounting, po"icy, andprocedura" manua"s regu"ar"y
updated and distri#uted to
appropriate personne"I
Are "arge e'penditures for
purc%ases, tra$e", etc.,
o#"igated a%ead of time to
ensure #udgeted funds are
a$ai"a#"eI
s a system in p"ace to
pro$ide appropriate
management wit%
e'p"anations of signi!cant
$ariations #etween #udgeted
and actua" !nancia" statusI
+n a mont%"y #asis, are
ad$antage reports reconci"ed
to department copies of
-%ere are some
un!t data and
information
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transaction documentsI #etween reports
and t%e copies of
transaction
documents. o
t%at, t%e
accountants andauditors need to
#a"ance and state
it fair"yf t%e Department maintains
a separate accounting
system, is it reconci"ed to
Ad$antage eac% mont%I
(CJs, n.d.) nterna" Contro" K$a"uation Juestionnaires (CKJ)
nterna" Contro" K$a"uation Juestionnaires (CKJs) are used to
c%eck w%et%er a certain e'isting contro" is operating eEecti$e"y ornot to detect or pre$ent and correct a materia" misstatement (or
simp"y misstatement) at an assertion "e$e". n simp"e words CKJs
are used to appraise t%e operating eEecti$eness of t%e interna"
contro" system. And if a certain contro" is operating eEecti$e"y up to
t%e standards, w%ic% in t%e opinion of auditor was necessary, t%en
it represents a de!ciency in t%e interna" contro" system (aa",
2011). Gowe$er, it is not designed in t%e form of es7o &uestion
#ut in narrati$e &uestion. -%at means, peop"e not on"y norma""y
answer "ike in CJs #ut a"so e'p"ain, descri#e t%e content of t%e
answer. f t%ere is a weakness detected, t%ey must put it inrecommendation?e"ow are some standard &uestions w%ic% wi"" #e designed in t%e
CKJs
Juestion Answer @ecommendationDoes your company
appoint an audit
committee t%at is
composed entire"y of
outside (nonemp"oyee)
directorsI
es. -%e
restaurant %as
#een appointing a
separate"y audit
committee
outside. t %irest%e auditing
company to
support it t%is !e"d
t is $ery
ad$antageous
#ecause t%e audit
committee outside
%a$e a
compre%ensi$eand genera" "ook
to a"" of system of
t%e restaurant.Does t%e audit
committee pro$ide an
independent re$iew of
t%e actions of corporate
o. -%e audit
committee Bust
gi$e a
compre%ensi$e
-%e restaurant Bust
%ires audit
committee for
supporting and
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managers on #e%a"f of
t%e companys
s%are%o"dersI
re$iew of t%e
actions #ut not on
#e%a"f of
companys
s%are%o"ders
de$e"oping t%e
restaurant. t is not
considered as a
s%are%o"der.
Does t%e auditcommittee work c"ose"y
wit% t%e companys
#oard of directors,
e'terna" and interna"
auditorsI
A#so"ute"y yes.Auditing is $ery
important to #oard
of directors,
"eaders or CK+
#ecause t%roug%
it, t%ey can %a$e a
compre%ensi$e
and t%oroug%
a#out t%e !nancia"
or accounting
status of t%e
restaurant.
-%is wi"" make t%erestaurant more
de$e"oped in t%e
future #ecause t%e
re"ations%ip
#etween #oards of
directors, e'terna",
interna" auditors
and audit
committee is &uite
c"ose.
Does t%e management
proper action
recommended in t%e
audit reportI
o. -%e audit
report Bust focuses
on !nancia" and
accounting status
wit% t%e
information and
data of t%e
restaurant #ut not
in t%e propermanagement
action.
-%is is a"rig%t
#ecause t%e audit
report is p"aying
t%e rig%t t%e rig%t
ro"e for t%e
de$e"opment of
t%e restaurant.
(@ase", 2013)
=.1
1. De!nition and #ene!ts of audit report:
An audit report is an appraisa" of a sma"" #usinesss comp"ete !nancia" status.
Comp"eted #y an independent accounting professiona", t%is document co$ers a
companys assets and "ia#i"ities, and presents t%e auditors educated assessment of
t%e !rms !nancia" position and future. Audit reports are re&uired #y "aw if a
company is pu#"ic"y traded or in an industry regu"ated #y t%e ecurities and
K'c%ange Commission (KC). Companies seeking funding, as we"" as t%ose "ooking
to impro$e interna" contro"s, a"so !nd t%is information $a"ua#"e. (9 Genderson, n.d.)
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t s%ows t%at t%e !nancia" transaction of t%e company is true and fair and comp"ies
wit% (AA*) it attracts in$estors.
2. -%e content of audit report
Auditor s%ou"d c%eck t%e #ooks of accounts and #a"ance s%eet and need to prepare
t%e audit report addressing to t%e s%are%o"ders and present it to t%e concerned
department and to t%e company. Copy of suc% report s%ou"d #e sent to a"" t%e
s%are%o"ders. Audit report s%ou"d contain t%e fo""owing t%ings.
• Answer, c"ari!cation and e'p"anation of furnis%ed &uestions are gi$en #y t%e
concerned aut%ority satisfactory or not.
• Ga$e an introduction to identify t%e !nancia" statements audited.
• Auditor s%ou"d pro$ide suggestion if necessary.
1 A draft audit report
Ln&ua"i!ed opinion: ?urton Gousing
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF BURTON
HOUSING
/e %a$e audited t%e !nancia" statements of ?urton Gousing t%e year ended 31
Decem#er 20M1 w%ic% comprise pro!t and "oss account, rents and t%e income and
e'penditure account of t%e restaurant, t%e #a"ance s%eet, t%e cas% Fow.
irst"y, the responsibilities of directors and auditors wi"" #e mentioned
-%e director must prepare t%e !nancia" and annua" report, t%e !nancia" statements
fo""owing t%e ru"es and "aw of L9 Accounting standards.
/e #ased on t%e audit resu"ts and reports t%ose w%o use t%e audit resu"ts as
re&uested, t%e purpose of t%e audit and t%e aut%orities if t%ere are $io"ations of t%e
"aw at certain "e$e"s re&uired #y "aw to report. /e report to you w%et%er in our
opinion t%e information gi$en in t%e directors report is consistent wit% t%e !nancia"
statements. According to Company Act 200
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/e report independent"y t%eir opinion #ased on t%e audit resu"ts on t%e "e$e" of
%onesty and reasona#"eness of !nancia" information, %a$e p"ans for co""ecting t%e
information, ensure t%e safety and amount of t%em, a$oid t%e mistake and fraud.
ina""y, in our opinion t%e !nancia" statements:
• *reparing accounts t%at are intended to pro$ide a true and fair $iew fo""ow
t%e @C (inancia" @eporting Counci") are e'p"ained t%e aut%ority, scope and
app"ication of accounting standards.
• *reparing fo""ows t%e Companies Act 200< and t%e information gi$en in t%e
directors report is suita#"e wit% t%e !nancia" statements.
• -%e !nancia" statements %a$e enoug% information to ensure t%e safety and
amount of t%em, a$oid t%e mistake and fraud.
Registered auditors Address
Date
Maa!e"et Letter
-%e ?oard of Director
?urton Gousing
o.H C%ua ?oc treet
Dong Da District, Ganoi 30t% 4ay,
201=
=.2
Dear mem#ers of t%e ?oard,
Management report- Financial Statements for the year ended 31
December 2011
/e %a$e audited t%e !nancia" statements of t%e company, as of and for t%e !sca"
year ended 31 Dec 2011. ?ased on our norma" practice we set out in t%is "etter
certain matters consider t%e audit work you wou"d perform on income from rents
and t%e income and e'penditure account of t%e restaurant.
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/e are re&uired to address t%e fo""owing issues and point out t%at t%e matters dea"t
wit% in t%is "etter came to our notice during t%e conduct of our norma" audit
procedures.
1 Dispatch note
• *resent system
-%e a#sence of dispatc% note in e'penditure account and t%ere is no seria"
name and num#er of materia" used
• mp"ication
-%e restaurant must face to pro#"ems to c%eck sa"es, e'penditure account. n
addition, t%e storekeeper can make t%e fraudN t%ey wi"" %a$e wrong
information and use t%e price of materia" for t%em.?esides, t%ere is no seria" name and num#er of materia" used, t%e
management cannot contro" t%e raw materia" w%ic% are pro$ide for
restaurant, t%e price of product can #e c%anged.
• @ecommendation
/e suggest t%at t%e company s%ou"d create dispatc% note for e'penditureaccount so t%e restaurant can ca"cu"ate t%e sa"es and contro" t%e goods w%ic%
are used from customer wit% rig%t &uantity.2 Wages of sta
*resent system
-imes%eets comp"eted #y production department workers are su#mitted
to t%e payro"" department wit%out #eing c%ecked.
• mp"ication
taE cou"d comp"ete t%eir times%eets incorrect"y and %ence #e paid t%e
wrong amounts.
• @ecommendation
-%e production department super$isor s%ou"d c%eck a"" times%eets #eforet%ey are su#mitted to t%e payro"" department. -%e company s%ou"d a"so
consider introducing a computeried c"ock in system.+ur comments %a$e #een discussed wit% your !nance director and t%e
C%ief Accountant and t%ese matters wi"" #e considered #y us again during
future audits. /e "ook forward to recei$ing your comments on t%e points
made. Do not %esitate to contact us s%ou"d you re&uire any furt%er
information or e'p"anations./e s%ou"d "ike to take t%is opportunity of t%anking your staE for t%eir co
operation and assistance during t%e course of our audit.
Yours faithfully,
Smiley roup
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