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.