In relation to the audit for the year ended 30 June 2018, you are required to prepare a report for the audit partner addressing the key audit risk areas for TFW.
(1) Based on the Income Statement and Balance Sheet provided, perform eight (8) analytical procedures for both the years 2017 and 2018 to help identify the potential audit risks relevant to TFW. You will need to calculate ratios which must be a combination of short-term liquidity, activity ratios, profitability ratios and solvency ratios (that is, 2 ratios from each category). Workings are required to be shown.
(2) Identify two (2) KEY inherent risk factors that arise from the nature of TFW’s business operations and explain why they are risks specific to TFW.
(3) Using the additional information and the analytical procedures performed in (1), identify four (4) key accounts at risk and explain why they represent a significant audit risk.
(4) For each of the accounts at risk in (3) above, identify the key assertion at risk.
Note: As the report is being written for the audit partner, you are required to show:-
· Proper sentence structure
· Clarity of expression
· Correct grammar and spelling
· Professional presentation
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