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AUDIT PLANNING MEMORANDUM

Client Name: Woolworths Limited


Year end: 1
st
July 2011/30
th
June 2012
Date: 9
th
Oto!er 2012
"re#ared !y:
$r%Nirmal De&al ' (0))9)3
$r%*rdo+an ,alman ' 10-03).
$r%/madou Diallo ' 3)39(..
$r%0ai1an /hmed23)3122.
4e&iewed !y: $r% "andula 5ama+e
1.TERMS OF ENGAGEMENT
/ 6ull statutory audit o6 the Woolworths Limited will !e arried out under the Cor#oration /t
20017 8his audit #lan 6ouses on the eonomi entity Woolworts o&erall%
2. BRIEF SUMMARY OF SIGNIFICANT BACK GROUND INFORMATION
Woolworths Limited is a su!sidiary om#any their head o66ie is loated at 1 Woolworths
Way7 9ella :ista7 N;W7 /ustralia% 4e+istered with /;<= as a 6ood and sta#les retailer% 8he
>ey #eo#le are 5rand O?9rien is C*O and 8i+eel Je+en is Diretor 6or the su#er mar>ets and
the #etroleum% Durin+ 2011 the re&enue was @ -(%1(3 !illion A(%3BC7 net #ro6it a6ter taD
@2712(%0 million inreased -%1B7 inrease in 6ully 6ran>ed Di&idend is 122 ent #er share
.%1B7 inreases in *arnin+ #er ;hare is 13(%. entsC7 em#loyees are a##%1907000
A Woolworths Limited /nnual re#ort 2011 #%3C
2.1 Business Risk Fac!"s
9usiness ris>s would result 6rom si+ni6iant onditions and irumstanes that ould
ad&ersely a66eted the Woolworths Limited% We will o!tain and understand analytial
#roedure inludin+ disussion with mana+ement% "er6ormin+ analytial #roedures as well
as o!ser&ations o6 #roess in ation and ins#etion o6 rele&ant douments% 8he ris>
assessment #roedures o6 !usiness ris>s to res#ond to a##ly o6 /;/ 31-%(0% We must analyse
6inanial statements and internal ontrol inde#endently and #ro&ide an un!iased &iew o6 the
6inanial ondition o6 Woolworths Limited% 8he standin+ as an auditor ensures the om#any
and 6inanial loss 6or the sta>e holders et% 8here6ore needs to assess ris> and redue it
unae#ta!le le&el were minimise misstatement o6 6inanial statements o6 Woolworths
Limited% We wor> on these om#onents o6 an audit ris>% We assume that there were no
assoiated internal ontrols%
2.1.1 Fac!"s #a inc"ease "isk
8he relationshi# o6 materiality and le&el o6 audit ris> is o##osite to it?s eD#eted hi+her the
materiality the lo&er the audit ris>% /ordin+ the Woolworth?s 2011 annual statement an audit
ris>s hi+h as materiality le&el has !een set at -B o6 *98%
2.1.2 Fac!" #a $ec"ease "isk
When we on&ert to dollar amount this has a si+ni6iant in6luene on the 6inanial
#er6ormane we a##ly s#ei6i ation 6or derease ris> 6ator throu+h reduin+ in ontrol
ris>s and dedution ris>s% With the inreased le&el o6 inherent ris> we need to #lan detailed
#roedure !ased on the audit e&idene leadin+ to su!stanti&e #roedure rather than relayin+
analytial #roedure% Eee#in+ the materiality le&el low to ensure that the audit ris> inreased
as a result o6 hi+h inherent ris> is su!stantially reused aordin+ly no material misstatement
is re6let in 6inanial statement%
2.2 C!n"!% en&i"!n'en
We ma>e initial assessments o6 ontrol ris> when #lannin+ and doumentin+ our
understandin+ o6 aountin+ system and the ontrol en&ironment to determine audit a##roah%
8he audit ris> mana+ement and om#liane ommittee A/8$CCC is res#onsi!le 6or ontrol
mana+ement?s ations in the identi6yin+ material !usiness ris> in their mana+ement and the
re#ortin+% 8he !usiness units are res#onsi!le 6or identi6yin+ o6 mana+ement7 re#ortin+ and
ontrol ris> within their area A4is> mana+ement #oliy #%3C%
2.( Risk !) F"au$ )!" *!!%+!"#s
We onsider internal ontrol there is a ris> suh a lar+e amount o6 ash that would inrease
and derease asset le&el in the !alane sheet% 8he diretors should determine to ena!le the
#re#aration o6 the 6inanial re#ort that is 6ree 6rom material misstatement%
2.(.1 Misa,,"!,"iai!n

8he om#leDity o6 the transations and the e&ent that im#at the transations as well as the
de+ree o6 Fud+ement o6 the #eo#le in&ol&ed in the re#orta+e o6 the aount !alanes all
+enerally im#at its 6inanial assertions% Losses suh as assets and misa##ro#riations an also
a66et the Woolworth?s in the lon+ term as in the ase o6 arried 6orward !alanes%
2.(.2 F"au$u%en )inancia% "e,!"in-
Deision ma>in+ with a small num!er o6 #eo#le there6ore there is a ris> in ertain
irumstanes and this mi+ht result in loss 6or Woolworths Limited% We must ensure that
mem!er o6 the !oard and the a##ointed head o6 6inanial de#artment should #artii#ate in the
analysis o6 the Woolworth?s 6inanial statement%
(. P%annin- Mae"ia%i. )!" C!ns!%i$ae$ Ec!n!'ic Eni.
9ase @ /mount seleted and #erenta+e ABC a##lied:
8otal /sset:2 2109(%- million
$ateriality threshold "erenta+e seleted 1%0
$ateriality /mount 210%9- million
Base C#!sen an$ *#.
Di66erent #roess o6 understandin+ the #ro6ita!ility and ris> o6 the 6irm?s A!usiness7 su!
!usiness or any o6 the #roFetsC with the hel# o6 analysis o6 6inanial re#ort in6ormation
s#eially annual and Guarterly re#orts% With the hel# o6 this the 6inanial statement an easily
analysed ty#ially and starts with the re6ormulated 6inanial in6ormation% 8he relation to the
inome statement one ommon re6ormulation is to di&ide re#orted items into reurrin+ or
normal items and non2reurrin+ or s#eial items% <n this way7 earnin+s ould !e se#arated in to
normal or ore earnin+s and transitory earnin+s% 8he idea is that normal earnin+s are more
#ermanent and hene more rele&ant 6or #redition and &aluation% 8he total assets and how
they are use6ul in our senario is li>e that we ha&e a di66erent 6iDed asset whih omes with
urrent assets non2urrent assets7 ash7 in&estment and many others as well% 8hese total assets
are an im#ortant #art o6 the !usiness7 with the hel# o6 this the !usiness +ra#h +oes u# and u#
with suess6ul ste#s% /nd alon+ with this a !usiness whih is listed in the sto> eDhan+e
ha&e #lenty o6 in&estors and shareholders wor>in+ with their or+anisation they ha&e !een
materially misstated many times and they ha&e to 6ae a !i+ a loss and a !ad re#utation 6or the
onerned or+anisation%
Pe"cena-e /01 a,,%ie$ ! #e 2ase a2!&e an$ +#.
8he #erenta+e le&el whih we ha&e hosen in this re#ort is !etween A0%- ' 1%0C it means that
in !etween the 6i+ures may &ary little !it u# and down on the !oth sides !ut mostly they
omes aurate in !etween these #erenta+es% <6 we ta>e 0%.B it is ae#ta!le whereas more
than 1B o!&iously that ha&e inreased 6rom the #artiular 6i+ure% Li>e the Guestion arise here
is that A,ow easy it is to ommit 6raud or misstates to han+e the &alues o6 asset aountsC so
o!&iously it means the sometimes the om#any whih ha&e di66erent assets and they mention
that assets #rie whih is not same as om#are to the mar>et so that?s also the main misstated
#art in this setion that?s why they ha&e set some standards to a&oid this #ro!lem%
3. LA*S AND REGULATIONS APLLICABLE TO T4E *OOL*ORT4S LIMITED
8he Woolworths Ltd has used many Laws and re+ulations 6ew o6 them are here:2
2/;/31- ha&e !een a##lied in the 9usiness ris> 6ator in this re#ort althou+h it desri!es that
understandin+ o6 entity and its en&ironment and assessin+ the ris> o6 material misstatement
2/;/210 8erms o6 /udit *n+a+ement
2/;/21- Huality ontrol 6or /udits o6 ,istorial 0inanial <n6ormation
2/;/220 /udit Doumentation
2/;/230 Consideration o6 Laws and 4e+ulations in an /udit o6 a 6inanial re#ort
2/;/300 "lannin+ an /udit o6 a 6inanial re#ort
2/;/320 $ateriality and /udit /dFustment
2/;/330 8he /uditor?s "roedure in res#onse to /ssessed ris>s
2/;/-20 /nalytial "roedures
/ordin+ to these standards all rules and re+ulations ha&e !een im#lemented in the 6inal
re#ort o6 the Woolworths Limited%
5. P"e%i'ina". Ana%.ica% P"!ce$u"e
5.1 Rai! Ana%.sis )!" Ec!n!'ic Eni.
LiGuidity 4atio 0ormula Ised
BChan+e 6rom
2010 2011 2010
De!t 4atio 8otal Lia!ilities to total assets )%)(B 0%.2) 0%-33
Current 4atio Current /sset to Current Lia!ilities 9%3-B 0%39- 0%323
Hui> ratio
Cash7 mar>eta!le seurities and net
trade reei&a!le to urrent
lia!ilities (0%02B 0%3((. 0%2(.1
8imes interest earned
Net #ro6it 6rom ordinary ati&ities
!e6ore inome taD eD#ense to
annual
interest eD#ense 21.%-0B 10%0(93 12%03.1
"ro6ita!ility rate 0ormula Ised
BChan+e 6rom
2010 2011 2010
5ross #ro6it ratio 5ross "ro6it to net sales 0%(.B 0%2.03 0%2-91
*arnin+s #er shares
Net #ro6it attri!uta!le to the
mem!ers o6 Woolworth Ltd to
annual interest eD#ense (%)0B 0%2393 0%2..9

*66iieny and
"er6ormane ratios 0ormula Ised
BChan+e 6rom
2010 2011 2010
4eturn on assets
Net #ro6it 6rom ordinary ati&ities
!e6ore
inome taD eD#ense to total assets 23%9)B 0%1(29 0%1--3

4eturn on ;hare holdersJ
eGuity
Net #ro6it attri!uta!le to the
mem!ers
o6 Woolworths Limited to eGuity
attri!uta!le
to the mem!ers o6 Woolworths Ltd (%)0B 0%2393 0%2..9
<n&entory turno&er
<n&entories to ost o6 sales
multi#lied !y
the num!er o6 days in the #eriod 3%3-B 2-%19 2(%2)
5.2 ;im#le om#arisons
"ro6it and loss
BChan+e 6rom
2010 2011 2010
;ales (%3(B -(71(2%90 -17.9(%30
0ood and liGuor 302%).B 2)1 3-
9i+ W 392-B 1.1 (
Consumer eletronis 3)-%11B (1. (3
8otal +eneral merhandise 1031%33B -33 -1
5.( C!''ens !n s#!" an$ %!n- e"' %i6ui$i.
Woolworths? urrent ratio is lower om#ared to the !enhmar>% 8his raises a serious onern
a!out the liGuidity le&el o6 the om#any% /ordin+ to Clemens and Dyer A19).C the
!enhmar> should !e !etween 1 and 2% <n 2010 the om#any has @0%323 o6 urrent assets 6or
eah @1 o6 urrent lia!ilities a+ainst @0%39- o6 assets 6or e&ery @1 o6 urrent lia!ilities in 2011%
9etween the two years urrent ratio has inreased !y 9%3-B%8his inrease re6let an
im#ro&ement in the a!ility to satis6y its maturin+ o!li+ations and to meet an uneD#eted
demand 6or ash%
8he om#any?s Gui> ratio is also !elow the !enhmar> o6 @1% <n 20107 Woolworths ha&e
@0%3- o6 Gui> assets 6or e&ery @1 o6 urrent lia!ilities a+ainst @0%2- o6 Gui> assets 6or eah
@1 o6 urrent lia!ilities% 8his means that Gui> ratio has im#ro&ed !y (0%02B whih &ery
im#ortant% When om#ared with the urrent ratio7 it results that in&entory re#resent an
im#ortant #arts o6 the om#any?s urrent assets% ,owe&er the 6at that Woolworths has a hi+h
in&entory turno&er shows that there is no a onern that the om#any does not ha&e enou+h
Gui> assets to meet its un#redited demand in ash or de!ts !eause its in&entory is &ery
liGuid %
8he om#any?s in&entory turno&er was 2-%19 in 2011 and 2(%2) in 2010 whih show a
ontinuous inrease turno&er whih shows that in&entory is !eomin+ more easily on&erti!le
into ash%
Woolworths? de!t ratio was 0%.2) in 2011 and 0%-33 in 2010 this shows that the om#any?s
de!t ratio is !elow the lower !enhmar> o6 1 there6ore the om#any is usin+ less le&era+e to
6inane its ati&ities% ,owe&er the ratio has inreased !y )%)3B !etween the two years% 8his
&alue o6 de!t ratio !elow the minimum !enhmar> raises a onern a!out whether
Woolworths is usin+ le&era+e at its ad&anta+e% ,owe&er the 6inanial statement shows that
Woolworths is usin+ le&era+e e66iiently to aGuire other om#etitors suh as 5unns 4etail
and 9e>?s ,ome whih is the result o6 inrease o6 de!ts !etween 2010 and 2011 !y -99%(
million !y the issue o6 senior notes in the I; and other 6orm o6 !orrowin+s%
C!''en !n #e *!!%+!"#s P"!)ia2i%i.
5ross #ro6it has inreased !y (%)B indiates that the om#any has ma>e a !etter use o6 its
eD#enses !eause it is en+a+ed in an industry where the #ro6it mar+in &ariation is &ery low%
C!''en !n Pe")!"'ance !" E))icienc.
Woolworths return on asset has shown a downward trend !etween 2010 and 2011% <n 20107
the om#any made 1- ents 6or e&ery one dollar o6 asset in&ested in it% 8his amount had
dro##ed !y 3%3-B in 2011 to !eome 1( ents o6 #ro6it 6or a dollar o6 assets in&ested% 8he
return on asset ratio is ae#ta!le 6or om#anies that are sellin+ #erisha!le +oods and 6ast
mo&in+ #roduts howe&er the 6all o6 return on assets !etween 2010 and 2011 mi+ht raise
ertain onern !eause the 6inanial re#ort shows that the om#any?s +eneral merhandise
has shar#ly inreased !etween 2010 and 2011% <6 the inrease o6 +eneral merhandise is not
6ollowed !y an inrease on return on assets7 the om#anies not ma>in+ an e66eti&e use o6 the
6unds in&ested %
5.(.3 Su''a". !n *!!%+!"#s7 )inancia% ,!sii!n
<n o&erall7 with a de!t ratio that is !elow the minimal !enhmar>7 Woolworth?s 6inanial
#osition is &ery stron+ !eause this result shows that it use o6 le&era+e 6or runnin+ its
ati&ities is &ery low% 8he onern is in relation o6 the liGuidity o6 the om#any !eause its
urrent and Gui> ratios are !elow the minimum !enhmar>% ,owe&er the 6at that
Woolworth sells 6ast mo&in+ #roduts whih is re6leted !y its hi+h in&entory turno&er +i&es
on6idene a!out the a!ility o6 the om#any to meet its uneD#eted ash demand%
0urthermore7 its inrease o6 return on eGuity !etween 2010 and 2011 +i&es inenti&e to
shareholder a!out the o##ortunity to ma>e #ro6it 6or shareholders %
8. Ke. Au$i Risk A"eas
8.1 Ke. Au$i "isks a"ea9 "ro#erty "lant and *Gui#ment
8he most im#ortant issues that should !e onsidered in Woolworths are eDistene o6
unreorded dis#osal o6 assets suh as the dis#osal o6 a tru> or a landK and o!solete assets
suh as aident tru>s that are not su##osed to !e re#aired and also ha&e om#letely lost
their mar>et &alue7 or a !ro>en #om# mahine or 6rid+e that annot !e re#aired %$any assets
may !e o&er or understated% 8he assets mi+ht !e wron+ly &alued%
Ke. asse"i!n an$ au$is ,"!ce$u"es9
8here are 6ew transations 6or #ro#erty7 #lant and eGui#ment and most o6 the time indi&idual
there6oreK ontrol ris> assessment 6or these transations is most o6 the time unneessary% 8he
audit #roedure to use 6or lon+ term assets is su!stanti&e testin+ tehniGues %
8he #roedure should in&ol&e: 4e&iewin+ +ain and losses on sold eGui#ment !y reGuirin+
su##ortin+ douments 6or them%% :isit the #lant and note the amount o6 idle o6 nonurrent
assets that eDist% % "er6orm an estimate o6 aumulated de#reiation and de#reiation eD#enses
o6 the nonurrent assets%% <6 there are lar+e di66erenes that mean mana+ements are tryin+ to
o&erstate or understated #ro6it 6or s#eial #ur#oses%8he su!stanti&e #roedure in&ol&es initial
#roedures7 analytial #roedure and tests o6 details o6 transations7 and also test o6 details o6
!alanes and #resentation and dislosure%
<n the initial #roedure reGuires #er6ormin+ an initial #roedure o6 !alanes and reords o6
lon+ term assets that is su##osed to 6ae additional testin+% 8hese ati&ities in&ol&e &eri6yin+
the wor>in+ #a#ers L aumulated de#reiation aounts % 8he test o6 details o6 transations
re#resents a om#arison !etween the reorded amount in the 6inanial statement and the
amounts reorded in the su##ortin+ doumentation %
8.2 Au$i "isk a"ea9 In&en!".
Ou%ine !) issues9
8he main issues are that: <n&entory re#resents one o6 the most im#ortant determinants o6
inome% <n&entory transations re#resent a most im#ortant #art o6 the ati&ities o6 the
om#any es#eially in the +roery setor Atotal in&entory re#resent more than -0B o6 urrent
assets in !oth 2010 and 2011C% 8he 6at that in&entory re#resent the most im#ortant #art o6
urrent assets there6ore soure o6 inome7 there is hi+h ris>s o6 mani#ulation o6 in&entory to
mani#ulate #ro6it %
Ke. asse"i!ns an$ au$i ,"!ce$u"e:
2"ar>in+: the om#any may shi6t ertain +oods to an intermediary and onsiders it has soldK
29ill and holdK reordin+ in&entory as sales while the +oods are still in the om#any?s ware
house
2Channel stu66in+: +oods may !e shi6ted to a ustomer who has not the intention to !uy it%
Au$i ,"!ce$u"es9
<nitial #roedure is the ondut o6 an initial #roedure on reords and !alanes o6
in&entories in order to identi6y whih o6 them are su!Fet to more testin+% 8his #roess is
onduted !y om#arin+ in&entories to the reords that eDist in the wor>in+ #a#ers used
and also the in&esti+ation o6 entries that sound not re6letin+ the amount or soure
eD#eted% 8est o6 details in&ol&es he>in+ the in&entory reords 6rom the su##ortin+
douments and also the ut2o66 o6 #urhase%
8.( Au$i Risk A"ea9 Re2ae Inc!'e
Ou%ine !) Issues9
8he >ey issues 6or the Woolworth are where to in&est re!ate inome% /#art 6rom that
mana+in+ re!ate inome in a #ro#er way is also maFor onern%
Ke. Asse"i!ns ; Au$i P"!ce$u"e9
"resentation L dislosure7 4i+hts L o!li+ation: 8here must !e ins#etion 6or the #resentation
o6 re!ate inome% /s well as reGuired dislosure are there or not should !e analysed% <6 reGuire
doumentary e&idene should !e assessed% /#art 6rom that it must !e &eri6ied i6 ri+hts relates
to re!ate inome are !elon+ed to Woolworth%
8.3
Au$i Risk A"ea9 Li6u!" License
Ou%ine !) issue9
<n the year 2010 L 2011 Woolworth has done 6our di66erent aGuisitions whih are relates to
liGuor !usiness% 0or the same auditor need to he> the liense ty#e L #oliies %$oreo&er i6
there is any im#airment indiation eDists in the &alue o6 liense than what is the +ain or loss
Woolworth has o!tained 6rom that% <denti6iation o6 om#liane ris> L ontrol measures is
also o6 the >ey issue assoiated with liGuor liensin+
Ke. Asse"i!ns ; Au$i P"!ce$u"e9
1% Classi6iation: 8here must !e he> that liGuor liensin+ as an intan+i!le assets must !e
reorded with that headin+ alled liGuor liense %,ere 6inanial statement with neessary
!oo> reords will !e o!ser&ed%
2% /lloation L :aluation: :alue to !e onsidered 6or liense i6 there is any im#airment%
Doumentation must !e ins#eted #ro#erly relates with liGuor liense L #oliies
de&elo#ed !y or+anisation%
8.5
Au$i Risk A"ea9 G!!$+i%%
Outline o6 <ssue: 8he maFor issue 6or the +oodwill is its &alue% $easurin+ the e66et o6
#urhasin+ +oodwill at the time aGuirin+ other !usiness with their 6air &aluation is one o6 the
im#ortant areas to !e analysed to measure the ontrol ris>% 4eGuirement o6 any im#airment is
there or not must !e identi6ied%
Ke. Asse"i!ns ; Au$i P"!ce$u"e9
:aluation L *Distene: 8here should !e he>ed that intan+i!le assets are #ro#erly &alued L
authorised at the time o6 #urhasin+ !usiness% $oreo&er all the douments related with the
a+reed &alue at the time o6 aGuisition must !e measured with mathematial orretness% /s
there is im#airment #resent7 there must !e disussion L ins#etion o6 related e&idene to +et
aurate &alue o6 +oodwill%
8.8
Au$i Risk A"ea9 Se%) Insu"e$ Risk
Outline o6 <ssue: /s inherent ris> is hi+her in this area the amount #ro&ide to the sel62insured
ris> are as #er the +uidelines or with reGuire a##ro&als or not should !e monitored% 8he
#oliies 6or #ro&idin+ s#ei6i amount are mathin+ with aountin+ L taD rules or not%
Or+anisation has atually s#ent on sel62insurane or not also need to !e ins#eted%
Ke. Asse"i!n ; Au$i P"!ce$u"e9
Ourrene: <t must !e he>ed the e&ent related with sel62insurane ha&e ta>en #lae or not%
8he e&idene 6or the same must !e ins#eted #hysially as well as with douments%
*Distene: /mount alloated to sel62insurane is atually #resent in the aount or not should
!e he>ed% 0or the same &arious aounts must !e ins#eted%
<. Deai%e$ C!n"!% P%annin-
8here must !e onsideration eah 6ator durin+ audit #ro+ram de&elo#ment7 and they must
desi+n a##ro#riate inGuiries and tests when assessin+ ontrol e66eti&eness% *ah ontrol
om#onent and 6ator to !e addressed7 to ensure +reater onsisteny in audit #er6ormane and
to maDimi1e audit e66eti&eness 6or ontrol%
<.1 Acc!uns a Risk9 T"a$e Pa.a2%es
Ke. asse"i!n9
Com#leteness: /ll the transation related to trade #aya!les is reorded as #er it should !e
reorded% /s here there is hi+h ontrol as well as detetion ris> is #resent 6ollowin+ ontrols
should !e used to miti+ate ris>%
C!n"!%s )!" T"a$e Pa.a2%es9
<n&oie "roessin+ Controls:
8he aounts #aya!le 6untion is res#onsi!le 6or the timely and aurate #roessin+ o6
in&oies adherin+ to the ontrols are as #er 6ollowin+s:
;e+re+ation o6 duties ontrols is eDerised 6or in&oie #roessin+ aordin+ to in&oie
#ayment terms%
:endor should !e #aid one and only one onsiderin+ disounts%
:endor in&oie is #aid u#on &alidation with +oods reei&ed and #urhase order%
:endor is #aid at the a##ro#riate #rie in aordane with the ontrat%
"urhases are authori1ed and in aordane with the om#anyJs a##ro&al le&els%
<nter6ae7 L s#read sheet u#load transations are aurately and om#letely
transmitted to the *nter#rise 4esoure "lannin+ A*4"C system%
Dis!ursement Controls:
/ dis!ursement within a om#any is ritial to adhere to the 6ollowin+ #roess ontrols to
detet and #re&ent 6raud within a timely manner%
Che> reGuests should !e routed to the a##ro#riate #ersonnel 6or re&iew #rior to
#ayment release%
Dis!ursement ati&ities should !e traea!le to the +eneral led+er and !an> statement%
/##ro&ed #urhase orders7 reei&in+ transations7 and in&oies must su##ort reGuests
6or #ayment%
:endor disounts should !e ta>en aordin+ to om#any #oliy%
Dis!ursements must !e reorded in the #eriod o6 #ayment
*nsure #ro#er aountin+ 6or &oid or anelled he>s%
;#ei6i limits o6 si+ned authority must !e esta!lished 6or !an> transations%
*nsure that the /utomated Clearin+ ,ouse A/C,C networ> aounts ha&e de!it
!lo>in+ a#a!ilities%
<.2 Acc!un a Risk9 *a-es
Ke. Asse"i!n9
Ourrene: One o6 the im#ortant assertion is that #ayroll eD#enses the om#any reords are
6or em#loyees who eDist and wor> durin+ the #ay #eriod asually% /lso7 all arued #ayroll
and #ayroll taD lia!ility !alanes should re#resent amounts the om#any owes at the date o6
the !alane sheet or not should !e assessed%
C!n"!%s )!" *a-es9
8estin+ 6or terminated em#loyees:
8o ma>e sure no terminated em#loyees are !ein+ #aid7 selet a sam#le o6 the lient?s
terminated em#loyees and trae them !a> to the #ayroll re+ister%
:eri6yin+ new asual em#loyee in6ormation:
;elet a sam#le o6 em#loyees hired in the year under audit% 4e&iew the #ersonnel 6ile and
ma>e sure eah new em#loyee has a##ro#riate doumentation aordin+ to the audit
reGuirement%
Re)e"ences9
htt#://www%oso%or+/auditMsho#%htm re&iewed on 3120922012 at (#m%
htt#://www%auas!%+o&%au/admin/6ile/ontent102/3/Jun11MCom#iledM/;/M31-%#d6 &iewed
on 3120922012 at (%30#m
"hilomena Leun+ et al7 2009 $odern /uditin+ and /ssurane ser&ies (
th
ed% #23) John
Willey L ;ons
4is> $ana+ement "oliy7 Woolworths Limited7 :ersion No&em!er 2010 #%3C% Woolworths
Limited /nnual re#ort 2011 #%3C
*ili6sen7 /7 Enehel7 W4 L Walla+e7 " 20017 J/##liation o6 the !usiness ris> audit model: /
6ield studyJ7 Accounting Horizons7 &ol% 1-7 no% 37 ##% 1932203%
;athye7 $ 20037 Credit analysis and lending management7 John Wiley L ;ons /ustralia7
$ilton7 Hld%
Leun+7 " 20117 Modern auditing & assurance services7 John Wiley7 $ilton7 Hld%
;ott7 ,$ 200-7 J/ID<8 4<;EJ7 The Secured Lender7 &ol% .17 no% 17 #% 22%
4onald7 *$ L Eennard7 ;9 20097 J/udit 4is> and <04;J7 The CPA Journal7 &ol% 397 no% .7 #%
32%
,ylas7 4* L /shton7 4, 19)27 J/udit detetion o6 6inanial statement errorsJ7 Accounting
Review7 ##% 3-12.-%
5len7 L57 Jerry7 L87 "aul7 JC L 8heodore7 J$ 20117 J"ere#tions and $is#ere#tions
4e+ardin+ the InGuali6ied /uditorJs 4e#ort !y 0inanial ;tatement "re#arers7 Isers7 and
/uditorsJ7 Accounting Horizons7 &ol% 2-7 no% (7 ##% .-92)(%
,ylas7 4* L /shton7 4, 19)27 J/udit detetion o6 6inanial statement errorsJ7 Accounting
Review7 ##% 3-12.-%
Leun+7 " 20117 Modern auditing & assurance services7 John Wiley7 $ilton7 Hld%
4onald7 *$ L Eennard7 ;9 20097 J/udit 4is> and <04;J7 The CPA Journal7 &ol% 397 no% .7 #%
32%
;athye7 $ 20037 Credit analysis and lending management7 John Wiley L ;ons /ustralia7
$ilton7 Hld%
;ott7 ,$ 200-7 J/ID<8 4<;EJ7 The Secured Lender7 &ol% .17 no% 17 #% 22%