Steps for Auditing an Incomplete Account

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Introduction:

In this case study, we will explore the audit of an incomplete account for XYZ Company Ltd, a small manufacturing company. The audit was conducted by ABC Audit & Co in order to provide assurance to stakeholders about the accuracy and completeness of the company’s financial statements.

Step 1: Planning

Before beginning the audit, the auditors at ABC Audit & Co reviewed the previous year’s financial statements and identified areas that needed special attention. They also met with the company’s management to discuss any changes in operations or accounting policies that may impact the audit.

Step 2: Understanding the Incomplete Account

During their initial assessment, the auditors discovered that XYZ Company Ltd had not completed their accounting records for the current year. There were missing invoices, bank statements, bank reconciliations statements, and other vital documents needed to compile financial statements.

Step 3: Audit Procedures

To address the incomplete account, the auditors at ABC Audit & Co performed additional procedures to gather sufficient evidence. This included:

a.  Reviewing the company’s internal controls to identify any weaknesses that may have contributed to the incomplete account.

b. Sending confirmation requests to vendors and customers to verify account balances.

c. Conducting physical inventory counts to ensure the accuracy of inventory values.

d.   Performing bank reconciliations to verify cash balances.

Step 4: Field Work

The auditors spent several weeks at XYZ Company Ltd Headquarters conducting fieldwork. They worked closely with the company’s accounting staff to gather missing documents and reconcile accounts. The auditors also interviewed key personnel to gain a better understanding of the company’s operations.

Step 5: Reporting

After completing their fieldwork, the auditors at ABC Audit & Co compiled their findings and issued a report to XYZ Company Ltd management. The report highlighted the areas of concern related to the incomplete account and provided recommendations for improvement in the future.

Conclusion:

Despite the challenges presented by an incomplete account, the audit conducted by ABC Audit & Co provided valuable insights to XYZ Company Ltd management and stakeholders. By addressing the deficiencies identified during the audit, the company was able to enhance the accuracy and completeness of their financial reporting.

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