AUDITING

Auditing

Auditing

Report

Introduction

Wentworth Brewster Limited is a small company that has started its operations recently. The company operates in the manufacturing sector where they make sports equipment that is further sold to expert retailers in this field. The company has large spaces available for making offices or extend their manufacturing units if there business becomes successful in the years to come. The company has chosen professional auditors in order to find out the weaknesses in their internal control system, management and ensure that there is no illegal activity conducting in the organization. The auditors will take into consideration the accounts of debtors, claim of damages, stock and rent accounts to find out the problems in each one. A period of three months will be taken by the auditors to ensure that all the books of accounts are showing correct information and there are no fraudulent activities going on in the organization. The materiality problems identified by auditors in the books of accounts of Wentworth is regarding the weaknesses of management to keep a record of its debtors, they are unable to resolve the issues with debtors, overall lack of follow up, amount paid against damages, no record of cash customers, poor stock management and no confirmation of the income earned on rent. The problems identified by the auditors raised serious questions on the internal control system of the organization. The auditors will take several steps in order to ensure that these problems are resolved and they are able to confirm in their auditor's report that all the books of accounts and financial statements are accurate and transparent.

Discussion

Under the GAAP principle the firm has been found following materiality in recording and misstating about four groups. The following individual analysis provides a detail regarding the materiality performed while disclosing facts about debtors, damages, stocks and rent earned by the firm. Therefore the auditors conducting the auditing of Wentworth Brewster Limited have highlighted the four key areas in which the information presented is not transparent. (www.icap.org.com)

Debtors

The auditors have identified that among all the debtors of the company there are five debtors who are not responding. Among them the most questioning debtor is the one who had a balance of £ 145,000 in his account. The management of the company after finding out the reason have made no further progress in resolving this issue and the credit controller of the firm is unable to provide a solid reason for this mismanagement. Thus auditors have urged that the company have committed the materiality which is omission or misstatement while performing audit. According to ISA materiality have an effect on the economic decisions in an organization. Materiality is performed by an organization regarding a certain group like in this case it has been performed against the debtors of the firm. This account shows a fair view but still there are areas that accountants should keep a record off and make the information available. There are 0.6 million of omission from the books of account of which details should be ...