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The practice of auditing commenced on that day when individual assumed to be stewardship over another's property. In organisation audit is done to do verification of result in the state affairs of company (Arens, Elder, and Mark, 2012). The auditors are having responsibility to meet with society expectation. In this assignment, different case study on auditing has been explained with their solutions.



Corporate managers are responsible for marketing pharmaceutical products which inevitable encounter the challenges of ethical issues. One of the reason is that ethics has special relevance to pharmaceutical industry which is related with intrinsic nature of drug product. As there are different types of hazardous wastage which could be managed by organisation. The resources which are using by company should be used in limited manner and these all should be included in decision which are taken by organisation.


An action which will take by auditor is that, first of all they will see that material error turnover should not be more than specified rate. If it has been found that there is a greater number of percentage of material error, then it is responsibility of manager to inform about hedge transaction (William Glover, and Prawitt, 2016). Moreover, they have to monitor all hedge transaction and identify that what errors are there where it increasing the errors. An auditor has to report all transaction which are doing by company to treasure in order to reduce the risk which is related with transaction. Through this they can also identify the weaknesses to control those areas where monitoring is not done properly.


While conducting audit on Billing & Associate, it is responsibility of auditor to provide sufficient evidence. But at the time of conducting audit, auditor did not perform their responsibilities in appropriate manner because there is not a proper evidence. In regard to this, client management asked to organisation to review engagement letter that audit has not been done properly due to lack of documentation. So, they are having right to ask for the sufficient document otherwise penalty or fine will be imposed.

A-4 (a)

Different type of threats is there which has been faced by several companies. In first case, auditor of Hail Pty Ltd finalised the financial statement which has been prepared by client. However, client is admitting about that he is having limited knowledge in preparing the records. In this auditor is having responsibility while finalising the account he is responsible to check it again. Hence, there is independence threat to organisation (Yang, and Jia, 2013).

In second case, auditor of Travel Time Ltd is providing suggestion for improving their quality of services. To gain consumer confidence, organisation need to set the price of goods and services at reasonable price. Along with this they have to provide all necessary document to audit to see that how much expenses are done by organisation (Furnham, and Gunter, 2015)).

In third case, in Civil Construction Ltd, auditor cannot do auditing because his wife is having substantial shareholding in that company.

In forth case, there is a threat of independence because company is not paying fee to auditor and due to this they are not issuing report also.

A-4 (b)

In first scenario, company will suffer from loss amount because auditor did not check the final accounts which has been prepared by client. As client had clearly stated that he is not having sufficient knowledge about all this. So, ultimately it become burden on organisation to give penalty or fine which is imposed by government.

Besides this in fourth case, mutual consent can be done by organisation with auditor because it depends upon the company profit whether it will increase or not in upcoming year (Wang, Li, and Li, 2012).


A). Material misstatement could come form various sources, covering external factors,like conditions under firm's industry and environment, and firm particular factors. Under this case, CPPL is the small chain of convenience stores which renders products grocery products. In this era, most of the supermarket chain capturing the market drastically with the help of rendering products at a cheaper rate. Henceforth, they are stimulating anti- competitive trade in order to eliminate small traders like- CPPL (Knechel, and Salterio, 2016).

A). Business risk

B). How this might lead to risk of material


Anti-competitive risks: CPPL's rivals offering products at lower rate. Which represents an anti-competitive risks.

In an integrated audit, auditor will check whether this affect the company brutely or not. If yes then, this may lead to material misstatement.

Product obsolescence risks: CPPL company started to expend products in order to provide products timely. But, this did not work between CPPL's customers and stock obsolescence is high.

This risk arise due to material misstatement because of obsolescence of the product.

Supplier payment risks: Under this, supplier of CPPL reduce payment terms from 30 to 14 days which would probably creates problems for the firm for payment to them.

If the supplier reduce their credit line then in that case, this would lead to risks of material statement.

Predatory pricing risks: Under this, predatory pricing method is used by the CPPL rivals for fixing low price in order to eliminate the competition.

The predatory pricing risk creates risks of material misstatement.

Lease risk: The CPPL company uses the premises in which the lesser demanding to 50% more in rent.

This risk would lead to material misstatement.

(a) Deficiency


(b) Control

 (c) Test of control

Due to inefficient planning of stock, company is performing their operations ineffectively.

Inefficient planning of stock would create a inventory risk for the firm.

TUPL needs to make an effective planning so that the company could optimum utilise the resources.

The auditor would check whether management of the company has made effective planning.

Inappropriate use of resources.

Business risk arises by the firm in order to have an effective planning.

The company needs to implement their resources effectively.

The auditor of the company needs to make their resources effectively so that these deficiencies can be removed.


(a) Deficiencies


(b) Control

Timely delivery of couriers to customers

There is a delay in courier a these are creating due to receipt of goods. Customers are doing regular complain to organisation in delivering courier in time period.

This deficiency can be control by using proper transportation services. Along with this they can also deliver these goods through online which save their time and cost.

Sales order

It is due to delay between sales orders and receipt of goods. The department is not dispatching information to further for making order of good. So, this is creating problem for customers also in timely delivery of goods.

Proper communication should be there and whenever customers are making order, then it should properly communicate to sales department.

Sales leger clerk

Sales managers and directors are not over looking to the books of account on regular basis. Along with this there is also no higher authority who command on them.

This can be control by regular monitoring on the books and sales which are made by customers.

Test of control

Auditor has to see that whatever deficiency which has been found by them has properly controlled or not by using different tools and techniques. Along with this they have to cross check the information which has been provided by departments. Further, if they identified that there is not proper use of techniques or methods, then it is their responsibility to report to higher authority about these problems.




Impact on materiality



Finance manager resigned and no quick replacement found


Finance manger takes all the responsibilities of the companies finance and in his absence it will be difficult to take decision regarding the finance. Even when a fresh candidate will be employed he will take time to understand the working of given institution hence this will decrease the materiality of referred enterprise.


HR manger resigned


Finance manger takes all the responsibilities of the companies finance and in his absence it will be difficult to take decision regarding the finance. Even when a fresh candidate will be employed he will take time to understand the working of given institution hence this will decrease the materiality of referred enterprise.


An error was detected.


Under this, the management of the cited company detected.


Initially, the purchase document was not found. But later on, this has been rectified.

No impact

The purchase document initially not recoded. But later on, this is been removed by the company.


From the above mentioned report, the proper auditing standard have been followed so that the company can adhere the proper auditing standard. Auditing helps in evaluating the performance of the company and also it is assured that weather the financial statements of the company are maintain properly or not.


Books and Journals:

Arens, A.A., Elder, R.J. and Mark, B., 2012. Auditing and assurance services: an integrated approach. Boston: Prentice Hall.

William Jr, M., Glover, S. and Prawitt, D., 2016. Auditing and assurance services: A systematic approach. McGraw-Hill Education.

Yang, K. and Jia, X., 2013. An efficient and secure dynamic auditing protocol for data storage in cloud computing. IEEE transactions on parallel and distributed systems. 24(9). pp.1717-1726.

Wang, B., Li, B. and Li, H., 2012, June. Oruta: Privacy-preserving public auditing for shared data in the cloud. In Cloud Computing (CLOUD), 2012 IEEE 5th International Conference on (pp. 295-302). IEEE.

Knechel, W.R. and Salterio, S.E., 2016. Auditing: Assurance and risk. Taylor & Francis.

Furnham, A. and Gunter, B., 2015. Corporate Assessment (Routledge Revivals): Auditing a Company's Personality. Routledge.


WHAT IS AUDITING?. 2017.[Online] Available through: <> .[Accessed on 21st September 2017].

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