AUDITING CASE STUDY

Auditing Case Study



Auditing Case Study

Introduction

Perfect Pies (PP) Ltd makes pies, pastries and pizzas, which it sells to retailers under its own brand name and also supplies a major super market chain. It has two sites: the bakery and its head office at Darlington, and a distribution depot in Wolverhampton. An audit of financial statements or financial audit is the financial statements verification of the legal entity in order to express an audit opinion. An audit risk is that which exists at all times which creates the possibility that an auditor issues wrong information because of failure to detect significant errors or mistakes that could completely change the opinion given in a report.

Aspects of Audit of the Financial Statements

Three aspects of this year's audit of the Financial Statements which might be regarded as high risk. The possibility of existence of errors can occur at various levels, this should therefore analyze in most appropriate way. They are different situations or events that lead to work in different ways and for determining the risk level for each particular situation. Thus, they have identified three types of risks which can be regarded as high risks. These are inherent risk, control risk and detection risk.

Prejected Time for Completion

As the closing date for the financial accounts of the company is 31st May and today is 8th May, we will try to complete the audit analysis by 30 May, which means we have 22 days to complete the analysis. We will divide the days into period of 5 days for each of the 4 sections of the audit and 2 days will be allotted for finalization.

Audit Procedures

There are different techniques of audit procedures used by the auditors to achieve the goal they set themselves, namely express an opinion on the financial statements of the company. These techniques are applied in accordance with auditing standards (Inspection & Audit Procedure). The main audit procedures are as follows:

Inspections of documents;

Physical observation:

Direct confirmation;

Screening;

Polls.

While it is easy to see what some refer to these techniques, as many others are more opaque. So we will detail all of these procedures. The most appropriate technique for Perfect Pies Limited would be Inspections of documents.

Inherent Risk Will Be High In This Year Financial Statement

This risk is only concerned with economic activity or business of the company, regardless of the internal control systems are being applied there. The case of financial audit which is susceptibility of the financial statements on the existence of significant errors, this type of risk is beyond the control of an auditor so that it is difficult to determine or make decisions for risk disappearing because it is something innate activity by the company (Gray I., Manson S., 2011pp. 212).

Among the factors that lead to the existence of these risks are the nature of economic activities, and the nature of transaction volume and product and / or services, also has the managerial relevance and quality of human resources available to the ...