FY2020: Define Business Risk Identify three Major Business Risks of the Company - Accounting Assignment Help

Assignment Task:

Task:

Description:

Part A: Planning memorandum

You are required to prepare a planning memorandum based on the FY2020 Annual Report for Bubs Limited (Bubs) (https://investor.bubsaustralia.com).

The planning memorandum must include the following:

i. Define business risk. Identify three (3) major business risks of the company and an explanation of why each factor identified is a risk to the business.

ii. ii. Define inherent risk. Identify and explain three (3) inherent risks that you ascertain from the business risks you identified (in part i).

iii. iii. For each of the three (3) inherent risks (in part ii), identify one (1) key account and one (1) key related assertion at risk of material misstatement.

iv. iv. An assessment of the overall inherent risk including an explanation of the factors that lead to this assessment.

Part B: Analysing trends in sales

In a fictitious scenario without COVID 19, you are the audit associate in the team auditing Bubs for FY2021. On 1 July 2020, Bubs opened its first retail outlet at Chadstone Shopping Centre in Melbourne. The store focused on their latest innovation — ice cream for babies made 2 with baby milk formula. The ice cream has multiple flavours, including strawberry, banana, and the most popular flavour, chocolate. The store has been a hit with customers, especially on the weekends and public holidays when the shopping centre is full of people. Bubs is yet to partner with any food delivery services, so they rely on foot traffic in the shopping centre for all their sales. Your audit senior has asked you to perform an analysis of the sales data of the retail outlet as part of the planning stage to identify unusual data points. As this is the first year of operation, there is no data from prior years to compare to. In one of the planning meetings, one of the managers suggested that the sales should closely align to the weather. Given that the retail outlet sells ice cream, the manager noted that the store should sell more ice cream during warmer days. Hence, your audit senior noted that you should plot a graph comparing daily sales against daily temperature. Your client has provided you with daily sales data to aid your analysis.

Before you proceeded with the analysis of the sales data, you had a meeting with your audit senior who suggested that you do the following (The suggested outline of the sales trend is available on ):

i. Download the daily sales data from the client

ii. Download the daily temperature data in Melbourne from the Bureau of Meteorology’s website (http://www.bom.gov.au/climate/data/), selecting the maximum temperature from the Melbourne Olympic Park Bureau station (Station ID: 086338).

iii. Merge the FY2020 retail outlet sales data with the maximum temperature data based on the date.

iv. Graph the temperature and sales data using a scatter plot with the sales data on the yaxis (vertical) and the temperature data on the x-axis (horizontal). (Note: you do not need to include the data in the assignment submission, just provide the graph)

v. Identify the unusual data points by drawing a box outline around them on the graph. You can group the unusual data points by using different colour box outlines for each group.

vi. Provide potential explanations for the unusual data points (eg. weekends).

vii. Suggest at least five (5) data points you should investigate further after the planning stage as these unusual data points have no potential explanations for being outliers. You can identify the data points by their specific dates

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