Question

Uleanview Marine Company Utatement of Income and Ret ol Income and Retained Earnings December 31, 2018 Sales 1-2 Sales returns and allowances Net sales Cost of sales Gross profit PBC 2017 2016 2018 $26,456,647 37,557 26,419,090 19,133,299 7,285,791 $22.889,060 27,740 22.861,320 16,530,114 6,331,206 $20,950,521 28,753 20.921,768 15,176,410 5,745,358 EXPENSES Accounting and auditing Advertising Depreciation Bad debt expense Business publications Cleaning services Fuel Garbage collection Insurance Interest Legal Licensing and certification fees Linen service Medical benefits Miscellaneous Office supplies Payroll benefits Pension expense Postage and courier Property taxes Rent Repairs and maintenance Salaries and wages Security Telephone 48,253 28,624 46,415 148,252 1,231 15,817 64,161 4,870 16,415 427,362 69,752 33,580 3,044 4,178 47,739 26,390 569,110 40,770 8,623 3,978 158,526 51,316 4,310,281 96,980 5,707 21,633 63,329 6,316,336 969,455 344,605 624,850 46.750 27,947 46,578 162,344 872 12,809 53,566 4,674 16,303 364,312 29,914 27,142 1,939 4,624 16,631 23,289 461,214 37,263 20,962 27,947 120,000 26,439 3,970,092 100,098 7,092 16,303 41,919 5,669,023 662,183 239,406 422,777 44,610 24,654 41,538 147,629 115 11,620 41,593 5,650 16,144 356,829 22,654 24,148 2,393 4,287 25,430 21,462 430,688 18,900 22,511 26,144 112,846 26,519 3,703,580 93,800 8,611 14,952 40,827 5,290,134 455,224 199,631 255,593 Travel and entertainment Utilities Total Expenses Net income before income tax Income tax expense NET INCOME 6,518,413 100,000 $7,043,263 6,195,636 100,000 $6,518,413 6,040,043 100,000 $6,195,636 Retained earnings at beginning of year Less: Dividends Retained earnings at end of year The accompanying notes are an integral part of these financial statements Current workpapers--audit planning +

IF THIS IS NOT THE PAPERWORK YOU NEED LET ME KNOW WHAT YOU NEED!!!!

Answer 1

Nature of Material Mistatement

Revenue that does not belong to the company but deliberately added to the revenue section is called fictitious revenues. Employees are inspired to increase the sales because they want to meet their targets of sales which might lead to their promotions. These sales can either be made to actual customers of the company or fake customers that only exist in the records for the employees to conduct fraud.

Due to the excessive figures in the sales, accountants may manipulate the figures and record the revenue in the earlier years of the services against the criteria for their personal financial interest. This will also inflate the debtors figure and overall misrepresentation to the financial statement.

Risk of material misstatement

The risk of material misstatement is the risk that the financial statements of an organization have been misstated to a material degree. This risk is assessed by auditors at the following two levels: At the assertion level. This is further subdivided into inherent risk and control risk. Inherent risk is the susceptibility of an assertion to misstatement because of error or fraud, before considering controls. Control risk is the risk of misstatement that will not be prevented or detected by a reporting entity's internal controls. At the financial statement level. Relates to the financial statements as a whole. This risk is more likely when there is a possibility of fraud. When the risk of material misstatement is high, the level of detection risk is lowered (increases the amount of evidence obtained from substantive procedures). Doing so reduces the overall audit risk

Audit procedure to be performed

Create awareness of hazards and risk. Identify who may be at risk (e.g., employees, cleaners, visitors, contractors, the public, etc.). Determine whether a control program is required for a particular hazard. Determine if existing control measures are adequate or if more should be done. Prevent risk , especially when done at the design or planning stage. Prioritize control measures. Meet legal requirements where applicable.