Demonstrate Risk Management Methodologies: Auditing Assignment - Management Assignment Help

Internal Code: MAS3200 Case Study: Alex Blenheim operates in a low gross margin environment, which typically means that large volumes are required to cover overhead costs and generate profits. It also means that overheads need to be kept under control to ensure that a net profit results from its operations. The company did not reach industry benchmarks with regard to profitability in the previous year, and budgeted to do better this in the current year. It thought that it could do so by keeping its costs down in relation to sales while allowing its gross margin to drop, evidently planning to generate a larger volume of sales. The company also planned to improve its working capital management by reducing levels of inventory and accounts receivable. It budgeted for a drop in debt levels, indicating that it expected to produce a healthy cash flow to enable it to do so. Question 1 Analyse the ratios with reference to the additional information. Identify the potential impact for the audit and any particular audit steps that need to be undertaken to reduce audit risk. For example, if there was a worsening inventory turnover, one of the audit steps would include a review for obsolete inventory. Answer this question using the following headings: (a) Ratio analysis (b) Audit impact (c) Audit steps to reduce risk Question 2 Identify the weaknesses in the internal control system described above and the potential impact on your audit. Indicate the additional audit steps that you will need to undertake to reduce audit risk. Answer this question using the following headings: (a) Internal control weakness (b) Audit impact (c) Audit steps to reduce risk Question 3  Develop and justify three (3) Computer Assisted Audit Techniques (CAATs) that you would use to assist you in this audit.