Audit Program

* Large inventory size (more than half of total assets) and low inventory turnover(less than half of the industry average).

✓ There is risk management, however, the company has to evaluate the risk and work on strategy plan by identifying the potential risk and changes that should be perform after the acquisition.

The safety aspect for risk management will evaluate the potential for human loss of life and or injury. The potential for major incident or accident, such as fire, explosion, or spill, including environmental damage. The necessity for security within the company is a highly need aspect of safety that can lead to risk. The revenues aspect for risk management will evaluate the loss of customer base, recovering of capital loss and recognizing uncoverable capital loss, and loss of opportunity in marketing of the product. The necessity for revenue risk management is key. The costs aspect for risk management will evaluate the costs that were incurred due to preventable problems. Also, costs due to increased warehouse space, vendor changes, and discount changes. A significant risk in cost for this company is the cost of legal defense. The legal aspect for risk management will evaluate regulatory compliance failures and actions that could result

Insufficiently determined the types of inventories these companies currently manage; Insufficiently described their essential inventory characteristics.

At the end all the risk are finance related, because the liability’s cost money and this will have an effect in the company’s earnings, so what is important is not only to try to avoid such events but also to be prepare in case they happen and have a plan, is like the saying “Hope for the best but be prepare for the worst”.

The main source used in planning the audit is the WesFarmer’s annual financial report together with the relevant

Office Depot uses multiple inventory strategies to order products. 90% to 95% of goods are ordered through automatic replenishment, manual replenishment, pull replenishment, and global sourcing are also used depending on channel, volume, velocity and cost. (Office Depot, 2015). The accuracy of the inventory from both a DC and store perspective is critical to the organizations success. Heizer and Render (2014) state that record accuracy is a prerequisite to inventory management, production scheduling, and sales. Accuracy is maintained by either periodic or perpetual systems (p.479). In Office Depot, the stores are required to cycle-count technology items such as laptops, desktops computers, and tablets five days a week. Discrepancies are entered in the system and bounced off the local DC’s on-hand inventory discrepancies. Office Depot is a “blind receive” organization meaning the stores receive pallets of products and simply unwrap and put them away. The only way a store knows if a product is missing is through the cycle-count program. This system was put into place to speed up the receiving process and eliminate unnecessary steps once the product was received at the store level. Office Depot conducts a full physical inventory once a year through a third party and trues up the inventory shrink at this time.

Identify the potential risks which affect the company and manage these risks within its risk appetite;

Business development brings weights to a framework that might not have had room schedule-wise/experience to get intended up for expanded generation or administrations. New timings of payables/receivables may make monetary strain. Clients may feel underserved. Workers may be uneasy about all the progressions.

An important decision for any shareholder is deciding whether or not to do business with that company. When a business is audited, the operations are reviewed to make sure that nothing is being hidden. An auditor will review the company’s financial statement and practices to confirm that each are direct and correct. The financial statements are the business’s way of representing them and showing that they are following the Generally Accepted Accounting Principles. The audit process is an important one because it provides a platform for the auditor’s opinion concerning the financial statements of the company. As part of the audit process the auditor will conduct an audit plan that outlines a number of actions that he or she will be perform while also detailing the reason for those actions. With every audit, the business’s management is in charge of handing over the financial statements that the auditor will review; while the auditor will review the statements for any material or immaterial misstatements.

1. If the company had dropped product 103 as of January 1, 1993, what effect would

Second, the classification in inventory management is still inaccurate. That results in some problems such as: the severe lack of some products which are in growing demand (1 inch valve series 230), the redundancy making storage expenses go up and the stagnancy in storage area (to products like gear driven rotary and monitor controller)

When engaged in auditing a public firm, such as Apollo Shoe Inc., an auditor must determine when to trust in the company’s internal controls and when to ascertain auxiliary testing methods are obligatory to analyze control risks. The sales and collection cycle is rather a substantial fraction of the audit because this unique segment employs a multitude of documentation and records ranging anywhere from customer and sales orders, shipping documents, credit memos, and general journal entries; therefore, a working

The company problem is they using chaos system and it is difficult for the admin to estimate their profit. With the new system developed, the company can manage their inventory data easily, quickly and more secured.

SF does not want the product overproduced, provide timely reporting of product sales in order to avoid this problem. For this reason, the company's inventory becomes a serious problem.