In: Economics
RISK ARE AS FOLLOWS :
1.risk: Franko had being in th transaction of purchase of warehouse for $3-2 m and its mentioned that legal process will be completed by the end of the year.
response : discuss with management whether the warehouse purchased by the end or not. and for the confirmation check the docment of ownership.
2.risk :as the website had been upgraded , there is chances that the data may not be updated or may be inacuurate.
response :audit team should recheck the sysytem and its functionality and also whether the work is accurate or not.
3.risk: fianance team has asked the auditor to complete work before a week which may result in detection risk and also put lots of pressure on the team to do work before time .
response : audit should confirm about the preferable date, if it is to be reduced then ask for interim audit instead of final audit which can help auditors in reducing the detection risk and do the work hassle free.
4.risk : for the proper disclosure of accounts, the financed made in year through preferance shares must be categorised properly so that liability do not bounce high.
response : documents should be confirmed that preferance shares are under which category and also company had financed it fully under equity.
5.risk : fiance manager had resuced the depreciation rate by extending the uselful lives from 3 to four, but according to the accounting standards they must be revised annualy,otherwise if assets value increase genuinely then only it is applicalble.
responsse : discuss about the matter with the managers and also, check the reason behind the appreciation mentioned if any.
6.risk : by incrreasing the useful lies , manager is reducing the depreciation charge, which results in boosting profit margins or overvaluation.
response : mut talk to directtor about it, and check the proper reason behind the appreciation whether the asset replaced or anything else.
7.Franko has halted further sales of its new product Luge and a product recall has been initiated for the goods sold.
response : ask the director whether the cost reduction of these products will be mentioned in the books or not. if yes, then modify accordingly.
8.if there is issue with the quality of the luge productsor may be they are overvalued due to low quality then the cost.
response : testings or proper analysis should be made to find out actual cost of luge products and proper inventory check should be done.
9.financial team of Franko company have less time thus, giving chances to the certainity of occuring of financial issues or risk of errors in statement.
response : team of auditor must be ready to recheck the statement and to deal with high risk or error, of with spectism.
10.a customer of Franko company had announced that he is going to take legal action due to lack of information and profits because of luge products purchased by him.
responsse ; the case must be deal with the help of lawyers from the company side and the copy of that success must be attaached with the financial statement for more clearity.