An analysis of customer purchases alongside their bank information has to be done. It would be helpful in uncovering the credit worthiness of each client thereby justifying the huge discounts awarded. Likewise, the personal profiles of each salesperson has to be vetted to establish the levels of interaction with clients and the type of connection such individuals have. Whereas the details would be limited to available documentation to avoid privacy violations, an extensive search of official communication platforms would be conducted to facilitate the exercise (Dicksee and Montgomery 20). As such, the auditing process would have to alter the earnings section due to the tampering of sales projections. Consequently, the risk level to the organization would increase since it is losing several of resources by wrongfully awarding discounts to ineligible customers.
The presence of a problem within the rural industry hampers the preparation of an audit report by trivializing profit and loss calculations. In fact, it would act as a deterrent for conducting a proper evaluation of the retailer’s accounts. As such, assumptions would mount due to the tendency to spare financial improprieties by linking them to the poor status of the rural marketplace. Additionally, the level of risk within the organization cannot be well computed because the findings would be in accurate. However, an analysis of the business would entail records of the initial contract with the tractor retailer, copies of buyer agreements identifying the purchasers and evidence showing proof of company expenditure. Furthermore, there would be minimal forecasting due to the absence of accurate data about the rural market.
The introduction of a new management compensation scheme would raise the rate of risk assessment due to the perceived connection that such individuals have. The conduct of these officials would be either disastrous or beneficial to the firm as well. Therefore, its reputation would be hinged on their actions thus raising the business’ exposure to risk (Dicksee and Montgomery 37). Consequently, the balance sheet of the organization would be required as well as payment forms of senior managers. Such an approach would help to ascertain whether their wages are consumerate to the performance of the company. Moreover, the cash flow movements between the firm and other suppliers would be vital too in providing a glimpse at the nature and scope of disbursements made. While these checks would not be conducted out of suspicion, they would aid in determining any form of collusion between the parties to inflate earnings thereby increasing the managers’ returns.
The disappearance of stock can be attributed to insider trading malpractices. Therefore, accounts of bank signatories would be assessed to monitor the flow of financial transactions especially from the corporation. Moreover, stock options of the concerned managers will have to be scrutinized in order to verify the owner of recently sold ones. By so doing, a detection of illegal sales will be made and culpability known. Similarly, this development would hinder the compilation of group revenues since the absentee stocks will not be factored in the final report. Therefore, the overall outcome would place the firm at a higher risk of investor backlash due to the reduction in earnings. Moreover, the organization’s image would suffer upon such revelations becoming public knowledge and even customers may lose confidence in the brand. Such reactions are detrimental to the survival of the company and could lead to a restructuring of certain positions to avoid a recurrence.
Dicksee, Lawrence R, and Robert Montgomery. Auditing: A Practical Manual for Auditors. Charleston, SC: BiblioLife, 2009. Print.
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