Auditing - report on the audit of Perfect Pies Lmt Essay

Auditing - report on the audit of Perfect Pies Lmt - Essay ExampleThe comp some(prenominal)s reserves have also increased during the current financial year which shows that its investors are considering the company lucrative and are planning to have a long boundary association with it. The companys current ratio is also very much stable and presents the fact that the company is utilizing its resources prudently. We have been appointed as the statutory auditor of the company, for the financial year ended March 31, 2012, in order to express an opinion whether the financial statement of the company are free from any misstatement and represent a true and fair view of the affairs of the company. By analyzing the financial performance of the company in the prior year, and considering the asset base, the company has been classified advertisement as SME (small and medium sized entity). The audit methodology, risk c overage and materiality have all been considered and devised which are rele vant for the audit of a SME. The materiality has been calculate by averaging out the profit of the current year and prior year and applying a haircut of 5% which is suitable for SMEs. After the completion of the interim audit, no such(prenominal) event was identified which could question that the financial statements of the company are materially misstated. ... Due to uncontrollable circumstances, appropriate test of details could not be performed on the closing stock balance, whereas, the result of the test of details on debtor balance has also highlighted few grey areas. Certain discrepancy has also been spy in the carrying value of the non-current assets. Stocks The period from December to May is the busy season, during which our limited number of staff tries to cater a diverse and complex array of client, it becomes serious sometimes to provide sufficient number of individual in an audit team to carry out the audit as planned. Due to the mentioned issue, the stock guess of P erfect Pies Limited at its Wolverhampton site could not be performed. Audit procedure in such situation was only curtailed to managements examination and placing reliance on the client provided schedule. During the visit to the Wolverhampton site, the audit team acquired the detailed report of the stock from the stock keeper and reconciled the total balance as of the report with the carrying value of the stock as reported in the financial statement. The previously mentioned audit procedure is quite successful to acquire comfort over the completeness and valuation of the stock balance. As per the applicable financial reporting framework, stock balance is valued at the lower of cost or net manageable value. Without actually assessing the physical condition of the stock it is not possible to identify he stock item over which the NRV testing should be performed. Theres also a chance that the stock item mentioned in the stock list might not be present at all, thus it is main(prenominal ) to count the stock as either tag to floor or floor to tag. Since all of the above procedure could