The records of such minutes and any other documentation supporting the transaction should be evaluated. In an effort to safeguard the interests of the shareholders, the auditor should satisfy himself that the disposal was done at an arms length and that the proceeds realised represent the fair market value. Independent valuations may, therefore, be required. The auditor should obtain the documents containing information about the disposal and check that the cash records coincide with those records. Details of the buyer should be analysed. The impairment of goodwill for the company, as reported in the statement of financial position, is a matter that raises questions. The increment in the amount of provision for goodwill impairment for 2014 by 46000 Pounds in excess of the provision made in 2013 requires further investigation. The auditor should verify the methodology used in calculating the provision for such impairment and any reasons that would lead to such increment. These matters are not disclosed to the shareholders in the right manner and may indicate the management’s intention to cover up fraud (Rittenberg, Johnstone and Gramling, 2012).The significant decline in the revenues reported for the year 2014 compared against the revenues reported for the previous year indicates a high audit risk. It should be noted with a lot of concern that the disclosure made and the explanations given in the chairmans statement and the strategic report do not account for the trend in revenues. The values reported have firstly been rounded off, and the policy requirements in this concern should be investigated. The report that revenues from Argentina increased by 16% in 2014 compared to the revenues reported in 2013 and the 9.8% decline in Group revenues for the same period appears contradicting. The actual increase in the revenues accruing from Argentina was 15.7895 and not the 16% reported. It is not clear why the revenues from Argentina should have increased when at the same time the decline in-group revenues are attributed to Argentina.The auditor should investigate the issues surrounding the devaluation of the Argentinian Pose against the Pound and establish its actual effects on both the revenues accruing from Argentina and those of the group. The decline in revenues and the increase in the cost of sales by 11% is not adequately accounted for. Comparing the costs with
Gray, I. and Manson, S. (2008). The audit process. London: Thomson.
Pickett, K. (2009). Audit planning. Hoboken, N.J.: Wiley.
Rittenberg, L., Johnstone, K. and Gramling, A. (2012). Auditing. [Melbourne, Vic.]: South-Western Cengage Learning.
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