Financial Data Of Double Printers Limited â€Myassigmenthelp.Com

Question: Discuss About The Financial Data Of Double Printers Limited? Answer: Introducation The analytical process that persists with the financial data of Double Ink Printers Limited (DIPL) has been an influential factor for the construction of their audit plan. The constructed plan could be regarded as a parameter that would become a key to be followed during the preparation of the audit. These parameters have been helpful to the auditor in order to keep track of the entire cost that would be required during the computation of the audit at an efficient degree and this would aid in lowering the gap of understanding with the customers. The analytical method for the financial declarations of DIPL specifies the process of dissemination of the data (Audit Australia 2015). These processes of assessment can be undertaken making use of a variety of techniques. On the other hand, by taking assistance analytical method of examining the financial declarations, various financial experts and the accountants as well could interpret the data for attaining the decisions that would be be neficial for the business. The generalising of the analytical process assists in examining the financial disclosures at a general reference point. As an outcome, the financial records can be differentiated with reference to the numerous entities or with the time schedule. The auditors try to think of several items that have been disclosed in the financial statement with respect to the financial reporting technique (Sarens et al., 2013). An example can be drawn that like the registration of the items that are inclusive of liabilities, assets and the equity stakeholders in the reporting of the financial statements of DIPL along with investigating deviations from the practical situation. It has been observed that benchmarking has been regarded as a process of evaluation and this process can be used in a precise manner for the scrutiny and the evaluation of the audit plan (Stevens 2014). The differentiation in the real financial announcement from the benchmark aids in discovering the variances and is aids in asses sing the discovery of the factors of the recognised variances. Furthermore, the ratio analysis could be attuned as an effectual technique of evaluation that can be exploited for the explanation of the financial declarations that is attached with the evaluation of the audit plan. Explanation to the Case Study The end result of the decision planning related with the planning of the audit is persuaded mostly through the results of the analytical process in order to publicize the data from the financial statements. The tables given below provide the financial ratios that have been constructed with respect to the case study. Particulars 2013 2014 2015 Solvency ratio 0.62 0.44 0.21 Profit margin 0.068 0.60 0.06 Current ratio 1.42 1.46 1.50 The table that has been computed above has revealed that the current ratio of DIPL has grown over the last three years. Furthermore, the margin profit has been noticed to be changing for the last few years. By taking assistance of the ratios computed above, the net profit margin of DIPL can be contrasted with the total profit that has been created (Wang et al., 2015). Conversely, this could be of significant value to the auditor in gaining an indication of whether the expenses are higher or are lower and if the administration of DIPL has the requirement to decrease the budget and the total expenditure of the same. The alterations in the ratio whether positive or adverse can be exploited as a preferential reason for examining the authenticity and the preciseness of the financial situation of DIPL. For instance, the solvency ratio that has been constructed in the table above assists in understanding the positive and the adverse patterns in the entire financial condition of DIPL (Brown et al., 2015). In a comparable manner, the comparison of the ratios for the last three years would be helpful in giving out the knowledge of eliminating the long and short term compulsions of the organization. Therefore, the auditors can get effective knowledge of the comparative situation of DIPL for the past three years along with examining the issues that leads to unwanted condition of DIPL. There are several factors that are intrinsic in nature during the constitution of the incidence of the misstatement of the materials in the financial disclosures of a specific individual. Conversely, it is natural for the existence of several types of unsystematic and systematic risks that shows a path for the misstatement of the financials in the financial declaration of DIPL. Furthermore, the discovered threats may be due to the financial and the non-financial reasons, which can consequently prevent a specific entity in showing a positive viewpoint of the financial statements. According to Stanislaus, et al., (2016), the risks that have been recognised may be related with the numerous threats of elimination that has been doubled with the threats of several undesirable mistakes for a specific accountant. Therefore, this could be understood as a intrinsic threat that arises from the activities of DIPL. Moreover, the DIPL employees are does not have sufficient insights and has a lower level of proficiency level. That has led to the rise in the level of internal risk for DIPL. Additionally; this shortage of experience may lead to the commitment of faults thereby leading to the increase in the level of risk (Pascoe, et al., 2014). This has been mainly because of the fact that the staffs constitute a key part of DIPL and it is impossible for DIPL to ensure the success of their business and future growth without an efficient contribution from the employees. Another key factor that leads to the rise of risk can be segregated into two segments mainly the external aspects and the environmental prospect for the misstatement of the materials during the past and the fraudulent practices. The factors that are environmental in nature helping in discovering the internal risks comprises of the swift modifications where the problems could be related to the valuation of the inventory, rise in the d egree of competition in the economy and the deficiency in the amount of capital (Stute et al., 2014). Furthermore, there exists a probability of misstatement of the materials, which could be influential for directing DIPL in the past of risk for the future years to come. The assessment of the current case study that is related to DIPL explains the fact that the problems and the convolutions that are associated to the progression of the CEO consists of the internal threats as well (Christopher 2015). In this respect, the changes in the CEO can be modified to be dissimilar as the nominees are entities. Therefore, the progress of the procedure without any alignment to the plan, delayed instigation of the method, inefficient initiation of the CEO and rise in the level of employee attrition may lead to such risks. The examination of the given case study has given out the answer that the introduction procedure if the IT mechanism has been the cause for the rise of specific problems. There has been a scarcity of employees in DIPL for handling the method of installation and execution while undertaking the examination and the reconciliation before implementation of the fresh arrangement during the completion of the accounting year (Harrison 2015). Furthermore, the primary evaluation has discovered that numerous transactions that were undertaken were not maintained in a precise manner. Therefore, this has led to the misstatement of the documents because of the inherent reasons, which has been discovered to be an omission error within a specific financial declaration. The DIPL employees are required to pursue a suitable series for the registration of the values of the accounts receivable and the ledgers related with the accounts receivable. Furthermore, the reconciliation of the bank is required to be maintained in an effective manner as well (Gurran et al., 2013). Along with this, the revenue registration that is obtained from the e-book and allowing for the textbook printing on the coming years could lead to several intrinsic threats due to the intricacy linked with the procedure. Therefore the inventory valuation that is in relation to the raw material at an aggregate cost is not ideal as the aggregate cost is lower than the current paper cost (Arntz-Gray 2016). The intrinsic costs that have been disclosed can be adjusted as the vulnerability of a distinct affirmation in accordance to the misstatement of the materials and they have been explained below: Rise in the pressure on the management and the employees It has been noticed that due to the increase in the work pressure of the employees who are working in DIPL, there has been fraudulent accounting within the company (Bunker 2015). As an outcome the numerous qualities have occurred that are inclusive of the inclination in differentiating cash flows, improper liquidity and operational outcomes. Misrepresentation The increasing pressure of work on the employees of DIPL has led to the ineffective accounting. It is due to this effect that several aspects have taken place that is inclusive of the tendency in meeting the cash slow statements, operational outcomes and inadequate liquidity. Overall management integrity According to the case study, the administration of DIPL has ineffective integrity and is predicted to be aware of fall in the brand image within the society of business (Alzeban, Gwilliam 2014). Overall management integrity In accordance with the provided case study, the DIPL administration has the integration deficiency and it is anticipated to be prepared for any sort of reputation loss in the organizational society. Abnormal burden on the management It has been observed that frequently there has been a survival of remunerations for the administration. As an outcome, it may lead to financial reporting misstatement. Nature of business entity DIPL has sustained to expansion for the key competitive and economic situations. Furthermore, these aspects may have an impact on the intrinsic threats of the business for the evaluation of the framework of audit planning in a suitable manner. The data with respect to DIPL has been obtained taking the assistance of the provided case study and this data has been influential for the disclosure of the potentiality for the implementation of a precise construction of the financial report procedure of DIPL. The various significant risk factors that are linked with the utilisation of the practices have been shown in the table below: Risk Type Explanation Workforce engagement in fraudulent activities After the examination of the data that has been observed from the case study of DIPL, it can be cited that the significant counterfeits of risk is in association to the employees of DIPL as they have the probability to be related to the activities. The significant factors that is related with the threat is the dissatisfaction among the employees of DIPL. In accordance to the case study, there have been an surveillance that there have been a huge strain from the management side so that the new accounting concept can be introduced. It has been noticed that the introduction of the new accounting process creates a massive stress in the employees, there is a rise in the level of threat as the staffs may be related with various fake practices (Morse Deutsch 2016). Hence, in order to perform as a remedy for the method of reconciliation, the DIPL staffs improvise several false practices and these methods may lead to the misstatement of the financial reports. With respect to the case study t hat is under consideration. due to inefficient use of the new software of accounts, the accountants of the organization has not been able to maintain in a precise process the primary accounting and the financial transactions for the current financial year. Additionally, the fraud risks can be understood in the process of selecting the succession of the CEO of DIPL. It is because f this event that there has been a rise in the internal risks of the firm. Processes related to financial reporting There have been various risks that have been observed with respect to the process of financial reporting of DIPL. In this condition, if the employees have significant financial predictions from the performance of DIPL, there is a rising chance of alterations in the financial reports that has tried to influence the stakeholders that the firm has been undergoing efficient activities and rise in the financial revenue (Bunker 2014). Hence it can be stated that the fraud risk in the construction of the financial reports id the significant threats of DIPL. According to the DIPL case study, there have been a key shortage in the raw material valuation of DIP, that is dependent on the computation of the average cost. The main reason has been the rise in the paper cost that is a value more than the average cost. Thus it can be said that it is not a precise method. The fundamental threat related with the implementation of the new system of accounting can be understood by taking help of understanding the various performance phase inside the firm. Moreover, the examination and the scrutiny of the financial reports of DIPL is helpful to the management to find out the fraud risks that is linked with the construction of the financial reports. The analysis of the ratios and the other financial techniques would be helpful for the identification of the precise results. Hence, it is important for the DIPL management to conclude the evaluation and the investigation within a stipulated time period. Reference List Alzeban, A., Gwilliam, D. (2014). Factors affecting the internal audit effectiveness: A survey of the Saudi public sector.Journal of International Accounting, Auditing and Taxation,23(2), 74-86. 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