The paper "Audit Risks of a Company" is a perfect example of a finance and accounting assignment. The company has not provided a complete list of the current assets in terms of audit accounts. Cash and cash equivalents are drawn as on a hypothetical basis. For example, cash and cash equivalents for the period ending on June 30, 2008, is 130 and the same has been reflected as 100. The calculations have been calculated for a period of eight months and the figures are drawn are approximately 2/3 of the previous figures for the whole year.
The calculations drawn on the pattern lacks genuineness and does not represent the real data therefore the calculations based on such type of data leads to misrepresentation for the whole data in favour of the company. The figures as illustrated in the list of current assert are also having similar type of cooked data and therefore lack credibility. No. 2. Major Risk A decrease in goodwill for the period ending on February 28, 2009, from the figure of 200 to 170 is a risk as associated with the financial statement in favour of the company.
The overall assets have been increased from the level of 1820 and reached to the level of 1900 and the trend needs to be reflected in the same pattern in case of the goodwill of the company from the previous level of 200 as on June 30, 2008, and reached on the negative side on February 28, 2009. The company has performed its business during the reporting period and all other parameters have been increased therefore the figures relating to the goodwill are a risk for the overall audit performance of the company.
These figures need to be reflected in its proper format. No. 3 Medium risk. The inventories as recorded on February 28, 2009, are at the level of 480 from the figures of 480 as on June 30, 2008. The figures for property plant and equipment for the corresponding period are 730 from 720 during the same reporting period. These figures have not been properly reflected in the financial statement as reported on February 28, 2009. The list of inventories and the list of machinery and equipment are belonging to the same category of the assets and therefore needs to be reflected with proper care and authentication.
The accounts of the company are based on the corresponding data for each figure and category. Their representation in the financial statements with confirmation reflects the financial position of the company for a specific time period. The net present value of the assets and the equipment needs to be drawn on the basis of the current value with the subtraction of the depreciation from the same figures.
The data as recorded in the financial statement is a risk for the overall accounts of the company. These need to be drawn on the basis of actual and verified figures for making the statements as truly reflective of the company's financial health in a specific time period. No. 4 Medium risk The current liabilities are based on a set of subheads with their requisite data. The bank overdraft for the period February 28, 2009, has been shown as 110 and the same was 60 at the date of June 30, 2008.
An increase of 50 in a single head has increased the liability of the company approximately 100% more than the previous figures. The mode of overdrawing from the banks is a risk associated with the company as bank borrowing will increase the net financial liabilities for the company with high-interest rates and low returns in terms of net earnings in the reporting period. The trend needs to be reversed for making the company in a profitable mode with lowering the financial burdens as drawn from the banks.