Prime Restaurant Suppliers Ltd. First Audit

Memo Date:October 26, 2010 To:Albert Desrosiers, CGA, Audit Manager From:Kevin Martin, CGA Ref: aboriginal Restaurant Suppliers Ltd. jump Audit Discussed beneath ar both(prenominal) of the issues identified upon review of the oddment public opinion sail and the various financial ratios, and after dismissal through the ca-ca performed by our canvas senior, Paul Hamilton. These issues if not address befittingly may conflict our ability to conclude the visit in effect and efficiently. Financial Ratios and Balance Sheet Analysis: ? limpid Ratios: Although the brisk sets current assets increased from $2.9 million in 20X5 to $3.4 million in 20X6, and its current and quick ratios increased to 1.19 and 0.65 one by one from last socio-economic classs figures of 1.08 and 0.63, they are importantly downstairs industry come of 1.31 and 0.98. In addition to this, the fact that the participation does not mother any cash or swimming short term in vestments increases the risk that the company may fill care liquidity issues in the near future. This will impact our audit work as we would need to do much significant work to confirm these year end balances. Since in that location could in like manner be a going concern issue we would afford to underwrite that the balances account on the balance sheet are reported at their net realizable value.

? Leverage Ratios: Although the knobs correspond Liabilities / Total Assets ratio of 64.6% is in quarter with the industry reasonable of 60.4%, its semipermanent Liabilities / Total Assets ratio of 22. 9% is significantly higher than the industry! average of 5.9%. Since the company is highly leveraged it is in truth important to ensure that the year end balances of the balance sheet accounts are reported properly. We would have to ensure that proper skim off procedures were obligate to record the payable accounts. We would also have to ensure that each the liabilities have been accrued and reported correctly at year end. ? Activity Ratios: The clients average collection block of 96.1 days is...If you want to get a full essay, put it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper