MINI PROJECT GROUP 1 [ TOP GLOVE ]
MINI PROJECT
PART A : ANNUAL REPORT
STATEMENT OF PROFIT OF LOSS
QUESTION 2
i) Review Management’s Assertions
Top Glove Corporation Berhad can assess management’s estimates and judgements to evaluate the reasonableness of key estimates like provisions and impairments and how they align with the observed financial ratio trends.
Moreover, Top Glove Corporation Berhad also can check consistency with budgets or forecasts by comparing the financial ratio changes against management’s forecasts and budgets to assess consistency.
ii) External Sources of Information
· Industry Benchmarks
Compare Top Glove’s financial ratios with those of similar companies in the industry to identify if the variations are industry-wide or specific to the company.
· Market Data
Top Glove Corporation Berhad should review external market data, such as competitor performance or economic conditions, to corroborate the company’s financial trends.
iii) Documentation Review
· Board Minutes and Management Discussions
Top Glove Corporation Berhad should examine board minutes and management discussions to understand the rationale behind significant financial decisions.
· Contracts and Agreements
Top Glove Corporation Berhad also can review significant contracts like loan agreements and supplier contracts for clauses that might affect financial ratios, such as covenants.
iv) Evaluate Internal Controls
· Internal Control Assessment
Top Glove Corporation Berhad may review the effectiveness of internal controls related to financial reporting to determine if there are any weaknesses that could have led to the observed changes in ratios.
· Test Control Effectiveness
Top Glove Corporation Berhad also can perform tests of controls to ensure they are functioning as intended and are effective in preventing or detecting errors or fraud.
QUESTION 3
01. DETAILED ANALYTICAL PROCEDURES
TREND ANALYSIS
Top Glove Corporation Berhad should compare financial ratios and trends over a longer period like 3-5 years to determine whether the changes in 2023 are part of a broader trend or an anomaly.
RATIO DECOMPOSITION
Top Glove Corporation Berhad may decompose key ratios into their components like disaggregating return on equity into profit margin, asset turnover, and financial leverage to pinpoint the exact causes of changes.
02. SUBSTANTIVE TESTING
REVENUE AND EXPENSE TESTING
Top Glove Corporation Berhad can perform detailed substantive testing on revenue and expense accounts to verify the accuracy and completeness of transactions. And also to ensure that revenue recognition policies are consistent and that no premature or fictitious revenue is recorded. Examine contracts, sales orders, and delivery notes.
CUT-OFF TESTING
Top Glove Corporation Berhad should verify that transactions are recorded in the correct period to ensure that financial ratios are not distorted by timing differences.
03. REVIEW OF SUBSEQUENT EVENTS
Top Glove Corporation Berhad also can investigate any significant events that occurred after the balance sheet date but before the audit report was issued. These events could provide insight into the reasons behind the changes in financial ratios.
04. RECALCULATION AND REPERFORMANCE
RECALCULATION OF KEY RATIOS
Top Glove Corporation Berhad also can independently recalculate the financial ratios for 2022 and 2023 to confirm the accuracy of the reported figures.
REPERFORMANCE OF KEY CALCULATIONS
Top Glove Corporation Berhad should reperform key financial calculations related to areas where significant variations were noted, such as revenue, expenses, or tax provisions, to ensure there are no errors or misstatements.
05. FRAUD RISK ASSESSMENT
Top Glove Corporation Berhad may also perform a fraud risk assessment to determine if the changes in financial ratios could be due to fraudulent activities, such as manipulation of financial statements. This might include reviewing the company's internal controls and performing more in-depth testing in areas prone to manipulation.
~THE END~
AUDITED BY : GROUP 1
PUNETHEN A/L RAMU 10DAT22F1029
SOM PHANIKFHAN A/P LIM OOI HING 10DAT22F1035
VARLINEE A/P EH SAN 10DAT22F1041
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