Case Study for Auditing Essay Example | Topics and Well Written Essays - 2000 words

Case Study for Auditing - Essay Example e aspects of this year’s audit of the financial statements, which might be regarded as high risk for Stanley Limited, include the distribution costs and the retained profit or loss from the viewpoint of income statements. From the perspective of financial presentation statement or balance sheet, the high risk aspect includes the trade payables as a part of current liabilities. From the viewpoint of the income statements, the significant aspect of distribution costs might be regarded as one of the high risk factors of this year’s audit of the financial statements of Stanley Limited. Fundamentally, the distribution costs which is also known as distribution expenses of any organisation are regarded as the expenses which are associated with the transfer of a product or commodity from the place of manufacturing to the ultimate position of the customers. Moreover, distribution costs or expenses also imply those expenses which are directly involved in order to transfer the commodities or the products from the warehouse to a person2. It has been identified that the distribution costs or expenses of Stanley Limited was increasing year after year and were becoming very much expensive as compared with other expenses i.e. administrative expenses and others. The main reason for considering the distribution expenses as a high risk factor is because the distribution costs or expenses directly affects upon the operating profit or loss of Stanley Limited. The main reasons for the increased distribution expenses of Stanley Limited can be due to its various expenses such as carriage on sales, selling expenses, salaries, travelling expenses and commission of the salesman among others. All these significant factors might constitute the distribution expenses as high risk factor for Stanley Limited3 In terms of the statements of the financial position or the balance sheet, the aspect of trade payables might be an important risk factor for Stanley Limited. Fundamentally, trade

Strategies for Improving Efficiency and Cost Reduction Essay

Strategies for Improving Efficiency and Cost Reduction - Essay Example As the shareholders are the legal owners of the company, therefore management has the fiduciary obligation to act in the best interest of the shareholders. Stockholders are often called shock absorbers as they provide risk capital to the company. The stockholders cushion the claims of other stakeholders. The value of any company can decline by as much as the value of equity capital. Without shareholders and their equity, the companies would have all been financed by debts and would continuously face financial anguish which results in liquidation or bankruptcy. The shareholder value approaches favorable strategies, by compelling managers to review business strategies based on prospective cash flows. The more company ability to generate cash, the more it can distribute to its shareholders. In short maximizing shareholders, wealth is equivalent to maximizing company's price. In order to attract the capital equity easily, many companies focus more on establishing shareholder value. Capit al equity is especially sensitive in those companies which are seeking to grow and operates in a risky environment. Every business profit is calculated by deducting expenses from the business incomes. The profit margin varies from business to business as the nature and size of the business requires different kinds of resources. The business needs resources for its development and each of this development has a cost to bear. No matter what type of business is your need human and financial resources needed to establish it. It is the utmost responsibility of the management of any company to provide quality resources at reasonable costs because they play the vital role in the business. The more company ability to generate cash, the more it can distribute to its shareholders. In short maximizing shareholders, wealth is equivalent to maximizing company's price. In order to attract the capital equity easily, many companies focus more on establishing shareholder value. Capital equity is esp ecially sensitive in those companies which are seeking to grow and operates in a risky environment. The profit margin varies from business to business as the nature and size of the business requires different kinds of resources. The business needs resources for its development and each of this development has a cost to bear. No matter what type of business is your need human and financial resources needed to establish it. It is the utmost responsibility of the management of any company to provide quality resources at reasonable costs because they play a vital role in the business.