AUDIT
Answer 1
There are different risks that are faced by the firm (CLASSIC WEAR LIMITED) in the successful business management. The reason in this is that there is an increasing level of the competition that crates the issue for the firm to successful manages the business and to perform well.
But at the same time, the main reason and the issue that firm faces is the not working properly the automated computerized inventory system (Van Grembergen et al., 2018).
It is because this computerized inventory system is only a way to get the idea about the all demand the inventory of the products in the market and of there is not proper working of the inventory system then it affects the all system.
In the concern of CLASSIC WEAR LIMITED, it can be determined that the automated computerized inventory system of the firm is not working properly and most if the employees of the firm also don’t know the exact use of this system, that is also a big issue for the firm.
It is because there are only few employees who know the use of this system and if they will handle this system then other work will also affect (Gollenia, 2016).
Apart from this, instead of automated computerized inventory system, there are also different issues such as high employees turnover rate is also one of the major issue that is also faced by the firm. It is because most of the employees of the firm are switching the job due to providing he high package by the competitor firms and different other facility.
Because of this, it is also one of the major issues for the firm to manage the employee turnover rate. In addition, the other issue that firms faces is the decreasing the sales (Dudin et al., 2015).
The reason in this is that there are different competitors in the market that crates the market challenge for the firm and affect the market of the firm as well. So, it can be determined that there are different risks and the issues that are faced by CLASSIC WEAR LIMITED in its business and they all affect the business of the firm.
The consequence of these all risks will be that the operational process of the firm will not work properly as well as that market value of the firm will also affect. At the same time, if firm will not control the employees’ turnover rate then it can also be a cause of big financial and market loss for the firm. Besides from this, the increasing level of the competition will also affect the revenue of the firm and the customer base as well (Guedes, and Pereira, 2015).
So, for managing these risks and to control the all consequences, there is a need for the firm (CLASSIC WEAR LIMITED) to take some serious actions on that and in this, improve and update the automated computerized inventory system is one of the major ways because it will help the firm to have the exact idea about the demand of the products in the market and will also help to meet the all need of the customers in minimum time and a effective manner.
Along with this, there is also a need for the firm to provide the better benefits for the employees because it will help the firm to overcome the employees’ turnover rate as well that is quite necessary for the successful business management (Cao et al., 2015).
In like manner, there is also a need for the firm to have its major focus on the products differentiation. It is because it will help the firm by providing the competitive advantage and to improve the image of the firm as well.
Answer 2
Although, auditing is one of the major steps of the firm in order to perform well in the market and to have the consistency in the business. But at the same time, there are also different risks in audit that are also faced by the auditor. In this, the major risk of the auditor is that the audit should be right and there will be no chance to the failure and fraud.
So, in order to assess the risk and to perform well the audit, ISA 315 the audit control is used by the auditor. In the ISA 315, the auditor identify and assessing risks of material misstatement through understanding the entity and its environment (Niemi et al., 2018).
In this, there are different stages and the steps that are checked and the followed by the auditor. In the first stage, the auditor will be analyzed and checked that that is the financial statement as a whole or not. It is because if there is anything misses in the financial statement that it will be the risk for the auditor.
The auditor will also check properly and will identifying inconsistencies in the figures that are already being audited. It is because any mistake and the issue can affect the position of the auditor and can also create the issue for the auditor as well. Because of this, for managing this risk, the auditor will check the all process again and effectively.
It will also make easy the firm to overcome the all audit processing issues and to provide the effective result of the firm (Hosseinpour, and Jans, 2016). In like manner, auditor will also have the discussions with management and other relevant people in the company.
It is because it is necessary for the auditor to overcome the future issues and the discussion with the management team will also make easy for the auditor to effectively manage the audit and to control the all process in a systematic manner and effectively.
As well as, it also overcomes the issues that are raised in the auditing process (Al-Rahamneh, 2016). Therefore, it can be determined that there are different steps and the process that are taken by the auditor.
Answer 3
There are different techniques that can be used by the firm in order to manage the audit and to perform better. But at the same time, there are three major techniques such as reperformance, observation and the inspection that and be used by the auditor as per their convenience and the types of business.
So, in the concern of CLASSIC WEAR LIMITED, it can be determined that in the reperformance stage, it is determined by the auditors that which control are measures are effective for managing the situation. In the observation stage, in this, the business process is also observed by the auditor and all in this, all elements and the situations are measured (Ishak, 2016).
And, in the stage of inspection, auditors examine business documents for approval signatures, stamps, or review check marks. So, it can be determined that there are different measures that can be used by the auditor to examine business documents for approval signatures, stamps, or review check marks.
Apart from this, in the con concern of CLASSIC WEAR LIMITED, it can be determined that there will be the use of inspection test of control to obtain sufficient appropriate evidence concerning purchases. It is because it will help the auditor to control the measures and to get the all information of the business from the beginning.
At the same time, it will also explore the way that can be used by the firm to manage the all audit issues and to improve the financial position of the firm as well (Gollenia, 2016). So, it can be formulated that the use of inspection will be quite appropriate techniques to be used by the auditor.
Answer 4
In order to assure about the validity of the inventory figure in the financial statements of CLASSIC WEAR LIMITED, there are different process that will be followed by me because it will help e to find out and to get the clear in-depth information about the inventory and the financial statement.
In the same concern, it can be stated that for of all there will be a testing classes of transactions, account balances, and disclosures. It is because for getting the overall information about the all inventory, it is needed for the auditor to get the clear idea about the all transactions that are done by the firm and the all account balance that can be used for the better forecasting of the remaining of the future capital (Dudin et al., 2015).
On the basis of this information, it will be easy for the auditor to get the all ideas about the inventory figure and the financial statement.
Besides from this, auditor will check the all financial statements and accompanying notes to the underlying accounting records. The reason behind to do this is that all financial statement provide the information for the auditor to get the idea about the all investments that firm has been done and will be done by the firm in its business.
The information of the accounting records will also be helpful for the auditor get the all short and long term investment of the firm. From these all information, it will be easy for the firm to get the idea financial position of the firm.
After the stage of checking the all financial statements, the auditor will examine material journal entries and other adjustments that are made by the firm during the preparation of the financial statements (Guedes, and Pereira, 2015).
It is because this stage will help the auditor to get the information about the internal and external investment of the firm and on the basis of that information; all audit process will be manage effectively.
After following these all stages, there will also be some more stages that are also to be followed by auditor and in this, examine the all documentation of the firm will also be a stage that will also be followed. It is because it will help for the auditor to get the clear and the in-depth views for the auditor to understand the process.
Because of this, these stages will also be followed by the auditor in the auditing process (Cao et al., 2015). Apart from this, the auditor will also reinform the process that all process that is followed by the auditor is accurate or not and if there is anything miss then auditor will check it again to make the sure the all process effectively.
So, these are the process that will be followed by the auditor to manage the substantive audit process to obtain reasonable assurance about the validity of the inventory figure in the financial statements of CLASSIC WEAR LIMITED.
References
Al-Rahamneh, L.S., 2016. The Impact of Computerized Information Systems on the Compliance of Internal Control Requirements According to ISA (315) in Jordanian Companies from the Perspectives of Their Employees. International Journal of Economics and Finance, 8(9), p.156.
Cao, M., Chychyla, R. and Stewart, T., 2015. Big Data analytics in financial statement audits. Accounting Horizons, 29(2), pp.423-429.
Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S. and Namitulina, A., 2015. The innovative business model canvas in the system of effective budgeting.
Gollenia, L.A., 2016. Business transformation management methodology. Routledge.
Guedes, J.F. and Pereira, L., 2015, June. Maximizing return on investment without increasing project risks—Near-shoring as a key practice on a business transformation programme: Case study on a training project for a global consumer goods company. In Information Systems and Technologies (CISTI), 2015 10th Iberian Conference on (pp. 1-6). IEEE.
Hosseinpour, M. and Jans, M.J., 2016. Categorizing Identified Deviations for financial Statements Auditing.
Ishak, S., 2016. Going-Concern Audit Report: The Role of Audit Committee. International Journal of Economics and Financial Issues, 6(6S).
Niemi, L., Knechel, W.R., Ojala, H. and Collis, J., 2018. Responsiveness of auditors to the audit risk standards: Unique evidence from Big 4 audit firms. Accounting in Europe, pp.1-22.
Van Grembergen, W. and De Haes, S., 2018, January. Introduction to the Minitrack on IT Governance and its Mechanisms. In Proceedings of the 51st Hawaii International Conference on System Sciences.
