Auditing Essay Example | Topics and Well Written Essays - 1000 words - 8

Auditing - Essay Example The following are the five main areas of high audit risk that face Havelock Europa Plc. The Company is said to provide equal opportunities to all employees for growth, training and career development regardless of age, sex, ethnic background or religion. They also consider the disadvantaged in the society and give them opportunities where they fit. In case an employee is disabled on course of duty, the company makes reasonable adjustments to accommodate such a member of staff. However, this information cannot be proved. According to the financial statements issued, it is hard to establish whether employees are remunerated fairly. Consolidated accounts make it difficult to establish whether employees from various subsidiaries are compensated fairly. The total number of employees for both 2012 and 2011 are given as 649 and 731 respectively, but the exact month when the new employees joined is hard to establish (Havelock Europa Plc 2012, P. 63). It is not sensible to assume all the new employees joined at the beginning of the year. Wages and salaries for the whole year ar e given, but auditors will be unable to determine the numbers of hours worked overtime that is usually not fixed. There is also likelihood that some of the employees being compensated exist only in books, the auditors may be unable to meet all employees especially those who do not work in the parent company (Porter et al 2008, p. 90). The financial statements presented show the values of noncurrent assets and inventory for both years (2011 and 2012). Non- current assets are reported on their deemed cost because any other value can only be an estimation (Havelock Europa Plc 2012, p. 82). The cost of the asset is then adjusted for depreciation every year using a specified formula. The risk arises in that the formula is only estimation and the auditor cannot be certain about those values. The notes to the financial statements also reveal the expected lives of both the tangible and intangible assets