Auditing Essay Example | Topics and Well Written Essays - 2500 words - 2

Auditing - Essay Example The audit activity at Farhan Muscat SAOG Company revealed that due to the inappropriate keeping of financial records for the current financial year in Salalah stores (water seepage during heavy rains), it became impossible to make an audit, which a senior auditor was going to conduct. While the company staff was informed about the stick take for the certain period to be conducted in the most convenient time, their other duties, such as movement of goods production receiving and dispatch operations continued. Purchases and sales were not stopped and other daily operations were continuing. During the audit, there was revealed that the some stock items of the company were not sold throughout 2014. The storekeeper reported these goods were included in the regular stock and were also valued as regular stock. The adudit inspection observed manager was carrying out all-inclusive check of the low priced stock, however, the premium stock was not counted. The results from the audit revealed the paucity of time of company’s management led to the inability to gather the necessary information about the stock and make the stock sheets at other locations across the country. According to the audit group results, damaged, obsolete, slow-moving stock and non moving stock was valued at purchase price by the company. The manager was informed about such stock to make a little part of the entire stock and is valued at purchase price. As a rationale, since physical inventory cannot be protected from loss, the company could prevent a material misstatement of its financial statements. The material deficiency relates to misstatement of the financial statements, and the failure of such preventive control will not lead a significant deficiency. However, it prevents a misstatement of the financial statements. This circumstance had to be carefully considered before it was