Essay Asher Farms Inc.

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Asher Farms Inc.
C a s e 2.4
PROFESSIONAL STANDARDS
Relevant professional standards for this assignment are AU Section 310, “Appointment of the
Independent Auditor,” AU Section 311, “Planning and Supervision,” AU Section 312, “Audit Risk and
Materiality in Conducting an Audit,” AU Section 314, “Understand the Entity and Its Environment and Assessing the Risks of Material Misstatements” and AU Section 316, “Consideration of Fraud in a Financial Statement Audit.”
QUESTIONS AND SUGGESTED SOLUTION
A useful approach for understanding a client’s business environment and [1] associated business risks is to perform a PESTLE analysis. PESTLE is an acronym for Political, Economic,
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 Changes in global weather patterns has resulted in more crop failures and sharply higher costs for grains. Continuation of the changing weather patterns throughout the world could adversely the cost of feed.
Financial Statement Accounts/Disclosures that could be affected: Cost of sales, revenue
The company may have to pay higher production costs or may not be able to produce and sell as much poultry.
 Availability and relative costs of labor could adversely affect the cost of production.
Financial Statement Accounts/Disclosures that could be affected: Cost of sales, revenue
The company may have to pay higher production costs or may not be able to produce and sell as much poultry.
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Section 2: Understanding the Client’s Business and Assessing Risk
Instructor Resource Manual — Do Not Copy or Redistribute
Availability and relative costs associated with using independent contract  growers to raise the live chickens processed in the poultry operations could adversely affect the cost of production. Financial Statement Accounts/Disclosures that could be affected: Cost of sales, revenue
The company may have to pay higher production costs or may not be able to produce and sell as much poultry.
Social
 Changing consumer trends, demands and preferences for meat products. Trends within the food industry change often, and failure to identify and react to

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