MUHAMMAD HARITH ADLI BIN NURUL AZMI 10DAT22F1004 KUMPULAN 7 ( HUP SENG SDN BHD)
PART C. Finding
and conclusion.
1. Verify the potential impact of these
variations on the company's business risk, going concern status and any
relevant issue.
Business
Risk
· Revenue
HSIB revenue
increased from RM295,832,845 million in 2022 to RM318,194,335 million in 2023.
This reflects a strong demand from household and successful recovery demand.
However, increased raw material costs led to a drop in profitability. This can
cause, the company face on pressure to maintaining their profitability.
· Competition Risk
HSIB
operates in a competitive, with arising from smaller local competitors to
worldwide competitors.
· Supply Chain Risk
In that
time, have a global issues like Covid-19. But Covid-19 starting to recovery and
HSIB also need to recovery from their profitability that drop due to Covid-19.
2. Prepare
the steps would you take to corroborate the information obtained from this
analytical procedure with other audit evidence, such as documentation
supporting management's assertions and external sources of information.
Document
Supporting
· Sales and Revenue
Audit Step:
Examine sales invoices, contracts and receipts for two years under review (2022
and 2023)
Purpose: To
confirm that revenue recorded match actual sales transactions, ensuring no
overstatement or understatement of revenue.
External
Confirmation: Obtain confirmation from significant customers for large sales
transactions and to confirm receivables balances.
Purpose:
Verify that recorded receivables are accurate and collectible.
· Examine Purchase and Inventory
Records
Audit Step: Perform
a test of purchases by matching vendor invoices to recorded trade
purchases for the period. This includes checking purchase orders and vendor statements.
Purpose: To
ensure that the cost of goods sold is accurately recorded.
External
Confirmation: Review inventory valuation and compare against external market
price for the material.
Purpose:
Validate the accuracy of inventory records.
3. Explain
additional audit procedures would you recommend to understand the underlying
reasons behind these variations.
·
Trend Analysis and Detailed Fluctuation Analysis
Procedure:
Perform a detail comparison of income statement over multiple periods.
Purpose:
Identify periods where significant changes occurred, such as spikes in revenue,
purchases, or expenses, and investigate the reasons for these changes. This
helps to increase their sales and profitability that contributed to the
variations.
Example: If
there a large increase in sales that relate to their sales during specific
quarter, do promotion, advertise and business expansions.
Comments