Toyota Ractis

Toyota Ractis 1.3VVT-i / 1.5VVT-I (RM55,800 ~ RM69,200)
Maybe to be launch after Chinese New Year
Wow, so nice isn't, is only RM 55,800 to RM 69,000
For an imported car which with nice accessories & design with quality safety system
I'm sure that many people will go for it
somemore got open sun roof,
wow i'm thinking of myself in the "New Zealand" trip now with this car

Going concern

Definition :
Assumption that an enterprise will continue in operational existence in the foreesable future(min. period of one year after the accounting period)

Indicator of non going concern ( P & L > S E L L )
1. P rofit
2. L iquidity (inadequate working capital & inability to finance loan when they fall due)
3. Supplies lesser & business failure
4. E xchange rate (adverse)
5. L ow margin (high cost can compensate with increase sales price)
6. L iquidity problem (high gearing & LT asset finance by ST borrowing)

Audit approaches on going concern issues (C O M A ):
1. C hecklist to review the going concern
2. O pinion formulation ( qualify or not qualify)
3. M anagement discussion
~ significant unexplained variance
~ future managerial action
~ future funding requirement
4. A nalytical review
~ financial ratios (P/L & B/S)
~ internal management ratios (effiency & productivity)

Auditor role - techniques determining GC concept (F A R C E)

1. F inancial support availability
~ co ability to maintain viability of itself & pension fund
~ assurance of fund in writing ( representation letter)
2. A uditor task & opinion
~ procedure specifically identify matter doubt director view GC
~ opinion on uncertainty to audit report
3. R eview / report :
~ assess adequacy on going concern through enquire management, observe the staffs, examine cash flow & profit forecast
4. C ash flow forecast :
~ director prepare cash flow
~ cash flow prepared (review consider available)
5. E vidence from director
~ adequate cash resources
~ no post balance sheet events which significant after balance sheet position
~ written statement going concern status

Auditor responsibility look for going concern (G A P E > opinion)

1. G rounds
~ Consider there are reasonable ground that the financial statement are prepared on going concern basis
2. A lternative counter lancing factors
Plan management to overcome problem
(a)well plan support by a profit forecast, cash flow, operating budget, reasonable key assumption concern profit forecast & consistency of pass performance.
(b) written confirmation from third party
~ borrowing facilities will continue extend / renew at what level together with any securities require
3. P reparatory procedure
(a) review interim and management account
(b) consult from management & staff to determine going concern
~ determine the post Balance sheet performance
~ ensure consistent of forecast
4. E vidence
(a) inspect corresponding files in supplier & customer to see any potential litigation
5. O pinion
~ after G A P E whether he have sufficient appropriate audit evidence to determine the going concern status of the finacial statement .

Mitigating evidence to be consider before qualify audit report (where going concern is in doubt) ( director P E T )

1. D irector (discuss with director)
(a) to ascertain they aware of circumstances
(b) find out any plans developed to deal with going concern
2. P eriod of time covered the plan
(a) the longer the period ( the less certain of the plan become)
3. E xpectation , forecast, plan, budget to be examined
(a) consider assumption made
(b) more specific of the plan, the more relevant of evidence
4. T hird party confirmation
~ provide of financial / guarantee

Further detailed audit procedures on going concern :
( C L U E S > C F & minutes )

1. C ash flow, P&L and other relevant forecast
~ Analyse & discuss with the management
2.
(a)L oan agreement
~ Review to determine any bleached of term
(b)L itigation claims
~ Enquire lawyer about the existence, reasonable of mgt assessment & estimate of fin.implication
3. U nfulfilled customer orders
~ consider entity plans
4. E vents after period end
~ review & identify those mitigate or otherwise affect GC
5. S ystem reliability in generating cash flow information & whether there is adequate support for assumption underlying
6. Compare prospective financial information
~ recent prior period to historical period
~ current period to result achieved up to date
7.
(a)F inancial statement (latest interim)
~ arrange & discuss
(b)F inancial support
~ Confirm existence,legality & enforce ability of arrange with related party
~ Assess financial ability of such party provide additional funds
8. M inutes of meeting with shareholder, BOD & committee
~ review references to finacial difficulties

Symptoms of overtrading ( S C A R E )

1. S tock level increase
2. C ash flow & heavy reliance on short term creditor & overdraft
3. A ctivity level increase ( sales increase)
4. R atio (quick & current ratio decrease to unaccepatable level)
5. E xpenses on fixed asset

Other reporting matters

Director statement of responsibilities

1. True & fair view of financial statement
2. Income & expenses whether or not incurred in that period
3.Going concern of the financial statement
4.Estimate & judgement are consistent
5.Records completed & comply with requirement

Solution to overcome expectation

1. Contents of audit report
2. directors sttement of responsibilities
3. corporate governance & internal control& risk management

Opening balances & comparatives

1. Appropriate b/d
2. Accounting policy comply with
3. Agree with preceding period financial statement

Test of control - credit purchases

**OCCURRENCE (nothing is duplicated / validity)

1.Select a sample of PO & ensure the authorisation limit was not exceeded
2.Select 3 mths in the PDB & ensure there are no duplicate supplier invoices & GRN
3.Vouch the entries in PDB to copies of invoices, GRN & PO
4.vouch the entries in inventory records to copies of invoices, GRN & PO
5.Vouch entries of purchases in purhcase ledger to copier of supplier invoice, GRN & PO

**COMPLETENESS (nothing is missing)

1.Select 3 mths in PDB & ensure the numerical sequence of GRN not broken
2.Select a sample of GRN & ensure this matching to the purchases invoice
3.Examine the existence of unmatched GRN in PDB & compare with the weekly report on unmatched GRN
4.Trace GRN to purchase invoice & entry into PDB & purhcases ledger
5.Select 3 mths & check evidence of review reconciliation of supplier statement with the purchases ledger & reconcilaition checked by the officer

**ACCURACY

1. Vouch detail of some supplier invoices to GRN & original contract in respect of price.
2. Select a sample of GRN & ensure that :
~There is evidence to check the invoices is cast accurately cast & extension
~The related invoice was initialled in the invoice grid for work done
3. Recompute the information of the invoice
4. Select 3 mths & check for evidence of review of reconciliation of supplier statement with the purchases ledger & that reconciliation was checked by an officer & reviewed evidence
5. Vouch entries in PDB to invoice

**TIMING

1. Examine the evidence of the unmatched GRN in PDB at the time of the test
2. Select 3 mths & check for evidence of review of reconciliation of supplier statement with the purchases ledger & that reconciliation were checked & reviewed by an officer

**CLASSIFICATION

1. Review the chart of account for adequacy of classification of the different types of purchases
2. Select a sample of GRN & ensure that :
~There is evidence of account coding (individual creditor & PDB were correctly updated as to account , amount & period
~The related invoice was initialled in the invoice grid for work done
3.Select 3 mths & check for evidence & review of reconciliation of the supplier statement with purchases ledger & that reconciliation were checked by an officer & reviewed evidenced

**POSTING

1. Cast the PDB
2. Select 3 mths & ensure the PLC was correctly posted using the PDB total
3. Select 3 mths & check for evidence of review of reconciliation of PLC with the purchases ledger & that reconciliation were checked by an officer & review evidenced

Audit of acc.receivable / acc.payable @ Y/E

1.Opening balances
Agree opening balances to prior year working paper
(Correct b/f, not misstatement,policy consistent)

2. Analytical Procedure
------Sales .review the trend of the sales
.compare the actual sales with budgeted sales
.compute gross profit to ensure all sales are taken up
--Receivable.compute the age of receivable

3.Reconciliation
.Obtain a list of sales ledger balances from the client and check correctness of individually sales ledger balances.Cast listing
.Agree the control account to balances to general ledger
.if the total on control account balances do not agree with the sales leger listing, request client for reconciliation
.audit the reconciliation by checking validity of reconciling item

4. Sales cut off test
.Obtain the last DO number issued for the year
.Take a block of DO before the year end and after the year end to ensure relevant entries have been entered into sales day book & sales ledger in the proper accounting period

5. Sales returns cut off test
.Identify material CN issued after year end , examine the supporting document(such as good inwards notes & determine the reason for the return & were recorded in the correct accounting year end.
6. Cash receipts cut off test
.Obtain the post slip for the last working day of the year to ensure each supported by a validated bank in slip
.Trace the deposit slip to the subsequent period bank statement
.Ensure the receipt were credited to the relevant receivable

7. Unmatched DO
.Review the sales day book in following period to identify the unmatched DO & ensure they are accrued for the year end

8. Debtor confirmation
.ensure balances are correct before preparing the letter
.decide on appropriate method of confirmation(## positive or negative)used for circularisation
.categories the accounts to different group & select the debtor for circularise(large balances,zero balances or credit balances)

9.provision for doubtful debt
.credit limit was exceed
.age of debtor comparison to previous period
.subsequent period payment by debtor in the post balance sheet
.payment history of the history if no payment made in post balance sheet period
.any legal action taken on debtor
.whether the debtor gone into liquidation

## Positive - make sure reply ( Large ind. bal D I E )
1. L arge individual balance
2. D ispute amount & irregularities suspicious
3. I nternal control weak
4. E rrors in book keeping numerous

## Negative - reply if dispute ( A L I )
1. A ttention
2. L arge individual small a/c
3. I nternal control strong

Threat to independent

1. Familiarity threat
EA have been audit partner for the past five years.
An EA independence may impaired reason being the close relationship between them.
These may impaired the judgement on the financial statement

Therefore recommended that rotation of the audit partner to avoid familiarity threat

2. Self Review
EA prepare the financial statement as well as carrying audit could provide a self review threat as they may not seen their error or want to report the errors they have been prepared before.

EA should therefore reject the preparation of financial statement

3. Advocacy Threat (supporting client)
Attending the social event with respect to the listing may be inappropriate as EA may be seen as supporting his client in this venture.
There is a threat of advocacy.
Support the client may seen as the the EA are too close with the client.
Therefore they may lose their independent view regarding the audit.
there is also a threat of familiarity.

EA therefore politely reject the invitation by stated reason.

4. Self interest
Under the ACCAs codes of ethics, the EA should not hold any beneficial shares in the client company.
The provision include the audit staffs involved in the audit as they maybe more interested in value of the shares rather rather then correct opinion of the audit.

The shares should be therefore disposal as soon as possible to prevent any potential independence problem

5. Undue dependence
Unpaid fee in respect of taxation services can constructed as loan to client.
An outstanding loan will affect independence as closure of the loan are seen more important than provide an appropriate audit opinion.

EA may need to discuss the matter with the board suggesting payment made alternatively audit work may need to delay until the fees paid

Factors to appoint a external consultant

1. Qualification
He should have relevant qualification to show ability to perform his job

2. Previous working experience
He can show related working experience from previous job

3. Acceptance by other staffs
Employing an external consultant may be difficult as ohter staffs may feel threatened of their job therefore Chief Internal Auditor must ensure internal staffs understand the reason of employing the consultant

4. References
He is able to to provide related refrences from previous employer showing the capability to undertake the work.

5. Project Management skill
He should able to display appropriate project management skill such as leading a team as performing the job need the cooperation form other staffs

6. Confidentiality
He may access to all relevant data that may seem confidential to the Co. Therefore he may need not to disclose the co information to third party