Background of the Study

• Identify and evaluate the need for and uses of an audit report

• Analyse the current version of the audit report

• Briefly analyse and comment upon the illustration of a possible improved version of the auditor’s report as outlined in the IAASB Invitation to Comment document.

The concept of an audit is very much important each business management depending upon the nature of the business. The concept of auditing and the concept of the in-house control system are related with each other (Bigus, 2012). There are different advantages of the in-house control system. The process of the in-house control system is a continuous process of accounting and auditing in the management. The in-house control system comprises of the set of rules and policies and procedure of the management, which are required to provide. There are different kinds of management problems that exist in the management (Braiotta, 2010). The systematic as well as the independent examinations of the documents, vouchers, accounts of the management to ascertain the financial statement of the present management in order to reflect a true and fair value of the management (Whittington and Pany, 2012).  

The job of the internal control management, as well as the job of the in-house control system, is to assure all the activities in the management to run smoothly. There are   different kinds management frauds in the management, the job of the in-house control system as well as the job of the in-house control system is to detect all the management frauds and its early detection if they are committed.  The concept of the in-house control system helps the auditor to complete the audit work on time (Gramling, Rittenberg and Johnstone, 2012). There are different kinds of the job of the auditor. It is not possible for the auditor to complete and perform all the jobs (Braiotta, 2010). All the management performs all the entire audit activity in different segments of time. On the other hand, the concept of the in-house control system is the process of performing a continuous auditing process in a regular manner. It is a process of regular auditing procedure in the management. The job of the auditor becomes a bit easy after analyzing the entire internal control report of the management (Gramling, Rittenberg and Johnstone, 2012).

Marks and Spencer is a British Multinational Company, which mainly deals with all kinds of retail products. This particular company fall under the retail management and are specialized in selling different minds of clothes, household products, etc. The entire process of auditing is a very old as well as a traditional process (Gramling, Rittenberg and Johnstone, 2012). The entire auditing procedure is a concept, which exists from the time of Vedic period. At present,   the concept of an in-house control system, as well as the process of auditing, becomes very much popular in every management (Whittington, 2012). Depending upon the nature of the business as well as the size of the management the concept of auditing as well as the concept of in-house control system has become compulsory. The primary objectives of the Marks and Spencer’s are much concerned with verifying the accounts exhibit and to reflect a true and fair statement of the company. The job descriptions of the auditor depend on the appointment made by the company for the auditor. The primary objective of the company and the auditor is to reflect a true and fair value of business (Whittington, 2012). The secondary objectives of the company are to omit errors and frauds, to omit compensating errors, to omit error of principles, etc. (Htay, 2012). Different management follows different kinds of auditing methods and auditing procedure. Statutory Audit, Periodical Audit, Interim Audit, Partial Audit, Cost Audit, Management Audit, Continuous Audit, etc.  Depending upon the nature of the business the type of audit programs are selected by the company (Braiotta, 2010). Marks and Spencer’s is a big retail chain company. The statutory auditing system is the auditing procedure this particular company has adopted (Dall’O’, Specter and Bruni, 2012).

Analysis of the Audit Report

This particular case study deals with the concept of the auditing procedure of the Marks and Spencer’s Company (Weirich, Churyk and Pearson, 2012).  This particular company appointed the auditor for two purposes. One is the primary objective and, on the other hand, there is the secondary objective (Htay, 2012). The concept of primary auditing is the concept of analyzing all the financial statement of the company to reflect a true and fair view of the financial statement of the company. On the other hand, the secondary objective of the entire auditing procedure is to detect different kinds of errors and frauds in the entire management procedure (Gramling, Rittenberg and Johnstone, 2012).

The current auditing report of this particular company shows the financial positions of the company (Stevens, 2011). Balance sheet of Marks and Spacers shows the financial positions of the company. 

Assets	Initial balance	2007	2008	2009	2010	2011
Ready money and temporary Funds	$5,000	$5,667,300	$5,392,737	$5,195,134	$4,997,763	$4,658,182
Financial records receivable	3,000	3,000	3,000	3,000	3,000	3,000
Total stock	19,000	19,000	19,000	19,000	19,000	19,000
Prepaid operating cost	0	0	0	0	0	0
On time income tax	0	0	0	0	0	0
Other Present assets	500	500	500	500	500	500
Total current assets of the company	$27,500	$5,689,800	$5,415,237	$5,217,634	$5,020,263	$4,680,682
Buildings of the company	$60,000	$60,000	$60,000	$60,000	$60,000	$60,000
Land and Buildings	45,000	45,000	45,000	45,000	45,000	45,000
Investment improvements	0	0	0	0	0	0
Technology and equipment	33,000	33,000	33,000	33,000	33,000	33,000
Less: Accumulated reduction fixed cost	0	18,600	37,572	56,916	76,632	96,720
Net property/equipment of the company	$138,000	$119,400	$100,428	$81,084	$61,368	$41,280
Goodwill of the Comoany	$0	$0	$0	$0	$0	$0
Overdue Returns	0	0	0	0	0	0
Long-term funds	0	0	0	0	0	0
Deposits	0	0	0	0	0	0
Other long-term assets	0	0	0	0	0	0
Total assets of  the company	$165,500	$5,809,200	$5,515,665	$5,298,718	$5,081,631	$4,721,962
Net  Liabilities	Initial balance	2007	2008	2009	2010	2011
Financial records payable	$3,500	$3,500	$3,000	$3,000	$1,500	$1,500
Accrued operating expense	0	0	0	0	0	0
Clarification payable/short-term liability	0	0	0	0	0	0
Capital leases	0	0	0	0	0	0
Other present liabilities	2,500	2,500	2,500	2,500	2,500	2,500
Total present liabilities	$6,000	$6,000	$5,500	$5,500	$4,000	$4,000
Long-term debt from loan Expense calculator	$35,000	$65,522	$50,320	$34,358	$17,598	$0
Other long-term debt	$42,000	$200,000	$150,000	$175,000	$225,000	$150,000
Total debt of  the company	$83,000	$271,522	$205,820	$214,858	$246,598	$154,000
Other liabilities of  the company	0	0	0	0	0	0
Entire liabilities  of the Company	$41,000	$71,522	$55,820	$39,858	$21,598	$4,000
Equity	Initial balance	2007	2008	2009	2010	2011
Owner’s justness (common)	$45,000	$45,000	$45,000	$45,000	$45,000	$45,000
Paid-in assets	25,000	25,000	25,000	25,000	25,000	25,000
Preferred equity	0	0	0	0	0	0
Retain pay	0	(232,940)	(470,864)	(705,941)	(964,860)	(1,242,024)
Total equity	$70,000	($162,940)	($400,864)	($635,941)	($894,860)	($1,172,024)
Total liabilities and equity of the company	$111,000	($91,418)	($345,044)	($596,083)	($873,262)	($1,168,024)

Analysis of the Balance Sheet

From the above balance sheet of the marks and Spencer’s the auditor can reflect a true and fair view of the firm. The Auditor can the appropriate structure of the financial positions of the management (Lenz and Sarens, 2012). After going through the auditing report, the auditor concluded about the entire assets and liabilities of the company. This particular company maintains a good financial background (Weirich, Churyk and Pearson, 2012). The majority of the shareholders can satisfy the individual demands. On the other hand, this particular report will help the new shareholders in the market to invest in the primary market on the shares of Markers and Spencer has adopted (Dall’O’, Specter and Bruni, 2012). According to the auditor of this particular company, a good financial report of the company will help the company to increase the entire financial structure of the company as by the reflection of a good financial report it will motivate all the shareholders to invest in the shares of this company (Vallabhaneni, 2014).

	2007	2008	2009	2010	2011	Total
Operating activities
Net income of the  company	$125,000	($237,925)	($235,077)	($258,919)	($277,164)	($884,084)
Reduction of fixed assets	5,350	18,972	19,344	19,716	20,088	83,420
The books receivable	9,622	0	0	0	0	9,622
Inventories of the company	43,163	0	0	0	0	42,163
Financial records payable	0	(500)	0	(1,500)	0	(2,000)
Amortization	0	0	0	0	0	0
liabilities company	0	0	0	0	0	0
Additional operating cash flow items	0	0	0	0	0	0
Total operating activities	$182,085	($219,453)	($215,733)	($240,703)	($257,076)	($750,879)
Investing activities
Investment expenditures of the  year	$0	$0	$0	$0	$0	$0
Acquirement of business of  the year	0	0	0	0	0	0
Transaction of Permanent assets	$0	$0	($1,000)	$0	$0	(1,000)
Other invest cash flow matter	0	0	0	0	0	0
Total investing activities	$0	$0	($1,000)	$0	$0	($1,000)
Finance activities
long-standing debt/finance	$450,111	($65,202)	$9,038	$33,240	($92,598)	$334,589
Chosen stock of the company	4,213	4,213	4,213	4,213	4,213	21,065
Sum cash dividend paid	3,879	3,879	3,879	3,879	3,879	19,395
Ordinary reserve of the company	0	0	0	0	0	0
Additional financing cash flow items	0	0	0	0	0	0
Total financing activities	$458,253	($57,110)	$17,130	$41,332	($84,506)	$375,049
Cumulative cash flow	$7,662,300	($276,563)	($199,603)	($199,371)	($341,582)	$6,645,182
Beginning cash balance	$5,000	$7,667,300	$7,390,737	$7,191,134	$6,991,763
Ending cash balance	$7,667,300	$7,390,737	$7,191,134	$6,991,763	$6,650,182

The above figure shows the entire cash inflow and a cash outflow of the company (Lenz and Sarens, 2012). After completing the entire auditing procedure of the company, the auditor concluded about the entire cash flow statement of the company. This particular cash flow statement of the company shows the entire cash inflow as well as the entire cash outflow of the company (Louwers, 2011). The cash inflow, as well as the entire cash outflows of the company, determines the net cash positions of the company. The result of the cash flow of the company will reflect in the balance sheet (O’Leary, 2012).

The International Auditing and Assurance Standard Board influence the institutional aspect on the International harmonization concept of the auditing procedure. This particular assignment contains the total auditing report and audit procedure of this particular company.  Due to the cultural differences of the working system of different countries the entire the auditing procedure of all the origination are different (Sinnett, 2010). This particular company follows Developing, Promoting and maintaining all the standards of the entire auditing procedure. There are some international stands, which are maintained by all the auditors in the proceedings of the audit work. The entire auditing procedure is changed in many aspects (Gramling, Rittenberg and Johnstone, 2012). There are different minds of modern techniques, which are introduced by this particular management (Stallings and Brown, 2012).  The main objective of this particular management is to develop all the strategies in the global format. At present, the concept of auditing is applicable in each business management. The concept of auditing is become compulsory for every management adopted (Dall’O’, Specter and Bruni, 2012). The type of auditing procedure is determined by analyzing the requirements of the management. It helps the management to develop a good working structure. This governing body was found in the year 1978 (Stevens, 2011). The main objective of this body is to bring a proper standard among all the rules of the audit which all the auditors follow while organization the day-to-day auditing activities. The majority of the auditing principles will maintain universality among the auditing practice in the entire world (Vallabhaneni, 2014).

5.0 Conclusion

This particular assignment mainly deals with the identifications of the needs and applications of the audit report.  The assignment and the audit report are based on the name as Marks a Spencer’s. Marks and Spencer’s is one of the largest United Kingdom Retail Company. The balance sheet, as well as the cash flow statement of the company, is maintained in the assignment. All the standards of IAASB about the universality of all the auditing principle

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