Discuss About The Organization In Checking The Integrity?
The auditing is one of the most important tasks for the business organization. It helps in assessing the errors in the financial statements of the organization and thus protect the integrity of the financial statements and enhance the trust. The main purpose of the auditing is to help the management of the organization in checking the integrity of the organization and its financial statements. Besides this, the auditors are responsible for evaluating the integrated report of the company. The auditing supports the organization is assessing the effectiveness of its internal financial control as well as assessed the internal as well as an external audit function (Britton and Waterston, 2013). The auditing of the financial statement is the key responsibility of the auditor as the financial statements show the current financial position of the company. Moreover, there are many users such as the investors and shareholders of the company use these statements to analysis their investments option and make important investment decisions. Hence, the auditing improves the integrity of the financial statements, and thus the trust of the investors and shareholders on the financial statements use to be improved. Moreover, in this situation, the investors and shareholders van take their investment decision more confidently (Oppermann, 2009). The undertaken auditing task has been conducted in the Wesfarmers Ltd. Which is one of the leading retailers of Australia.
The retail business in Australia has been developing and there is stiff competition. There are many big companies operating in these particular sectors that increase the competition in the market. Hence the market competition is increasing day by day. The Wesfarmers limited is a retail company in Australia and focuses on expanding its business operations. The company takes care of the entire stakeholders of the company and the management endeavour to make the company profitable for the entire stakeholders of the company (Dauber, 2005). The entire business organization is trying to develop more effective business and marketing strategies that help in enhancing their potentiality in the market and so that they can grab the maximum opportunity from the market and improve their prospects of activities within this retail industry. In this competitive market, the company Wesfarmers has maintained its position in this the retail industry. In this situation, the entire retails in the Australian market are battling with each other for the market position and try to grab the optimum position in the market and establish maximum growth and development of the company (Tracy, 2013). The management tries to develop the strategies that should be beneficial for the entire stakeholders so that the company can easily maintain its position in the market. The company put great emphasis on the auditing task as it helps in improving the reputation and integrity of the company. The financial statements are mainly of three types: balance sheet or positioning statement, income statements or profit, and loss statements, and the cash flow statements. The balance sheet shows the asset and liabilities of the company, and the income statements show the income of the company during the financial year, and the loss of the company is also recorded in this statement (Horngren, 2013). The cash flow statements show the cash inflow and outflow of the company. The auditing helps in checking the financial and non-financial information of the company that useful for the management in important decision making. In addition to that, the financial statements guide the user to make important decisions for the company. The Wesfarmers policies and the material risks with the management of the work structure are being made by showing identification of the risk factors for the organization (Jones, 2013). The review of the policies of the company is made for the purpose of managing the risks which are depicted to be creating barriers for the organization.
The appropriate structure is being made for showing the appropriateness in the work which is being addressed for the company. Therefore, the review of the disclosures is very much important for the management of the governance statement which in relation is being made to recognize and manage the material statements of the business risks (Horngren, 2014). The effectiveness and the adequacy must be reviewed by the administration which is being made by showing the enhancement of the work and also the structure of the administrative, accounting and the operation controls can be easily made by showing the enhancement of the work process and also the improvement of the controls can be made by showing the appropriate enhancement of the work. The financial statements are mainly of three types: balance sheet or positioning statement, income statements or profit, and loss statements, and the cash flow statements. The balance sheet shows the asset and liabilities of the company, and the income statements show the income of the company during the financial year, and the loss of the company is also recorded in this statement. The cash flow statements show the cash inflow and outflow of the company. Thus the company's material risks must be included for the purpose of reviewing the exposures to the fraud and also the monitoring of the implementation can be made by showing the risk management plans of the business which are needed to be reviewed (Krivogorsky, 2012). This also enables in establishing an appropriate environment which is showing the appropriate measurement of the risk assessments which are essential for the measurement of the work. Therefore, the adequacy regarding the self-insurance is being depicted in this case that enables ion providing the appropriate provisions to the workers for having the compensation, public liabilities, and also it includes the considerations regarding the public liabilities and the general insurance plans. This enables to focus on the contingency plans that are showing the emerging trends and the other factors that are relevant to the Wesfarmers risk profile (Ricchiute, 2006). For the case of the compliance, the monitoring of the effectiveness of the Wesfarmers regulations and the policies became the most crucial factor which enable to create an appropriate environment for the continuation of the practices that are essential for the management of the work and also the enhancement of the work can be made by showing the enhancement of the work. Thus the conduct is being made by showing the enhancement of the work and also the compliance measurement is being made by focusing on the regulations, laws and the accounting standards.
The liquidity ratio shows the debt level and risk level of the company. The current ratio of the company has decreased and it is below one. The ratio shows, it has become difficult for the company to pay the obligations. The financial leverage and debt equity ratio of the company has increased which means increase in the risks (Nobes and Parker, 2016). The risk can be controlled with the implementation of following measures:
- The company should use less debt sources to finance its activities.
- The company should manage all the operations to decrease the costs and increase the profit margin
- The company should determine and evaluate the risks that can hamper the operations
- The company should increase the quality and efficiency of the employees.
The audit risk assessment and controlling these risk is very much important for the company. The inherent risk is referred to the risk of the material misstatement in the financial report of the company that arises due to the omission or errors as the result of the failure of control. Thus, the auditors should be very careful while preparing the financial statements. The control is referred to the risk of the material misstatement in the financial report that arises due to the failure of the operation of the organization. The organization should have efficient internal control system in order to detect and prevent the probability of error and fraud. The detection risk is referred to the risk that the auditors unable to detect the material misstatement in the financial report (Schroeder, Clark and Cathey, 2011). The auditors should apply the audit procedures to detect the material misstatement in the financial report. The audit risk model can be used by the auditors to manage the risk of the audit engagement. The auditors examine the control and inherent risk to the audit engagement. The detection of errors and omission is important for fair representation of the financial statements.
The auditing is one of the most vital tasks of the business organization. It helps in assessing the strength and weaknesses of the company. Moreover, it helps in making important management decisions. The management can be able to take important decisions that help in improving the business operation of the company. It helps in enhancing the reputation of the company as well as it improves the trust of the investors and shareholders of the company (Powers and Needles, 2012). The management team of Wesfarmers should focus on the auditing process.
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