Audit Storyboard
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Astur Skincare audited by EY
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- V1 EY Assurance - Directors Office
- Director: Astur skincare has contracted us and your team will be responsible for their audit this year
- M: Noted, Is there anything significant to note before we begin?
- Director: Do factor in their increased marketing budget this year and their value to the firm as a large client
- V2 Astur Skincare
- Astur
- V3 Astur Skincare HQ
- CEO: Prior to the release of our new anti-ageing line, I want our internal accounting of inventory to be resolved, I've had enough with these variances, especially in the packaging department !
- COO: I agree, I'll communicate these concerns to EY and ensure our inventory systems are reconciled and addressed
- V4 EY Assurance - M's Office
- M: Noted, I will relay these concerns to my team and we will comprehensively assess the inventory account to identify any weaknesses and misstatements
- COO: Before we release our anti-ageing line, we'd like your team to investigate and reconcile our current inventory accounts and process controls, pay close attention to the packaging department
- V5 EY Assurance - M's Team
- Himaal (Director) assigns Michael (Audit Manager) and his team to Astur Skincare for the 20/21 financial year. Himaal passes along all relevant information and worksheets and highlights important information
- V6 EY Assurance - M's Laptop
- Astur Skincare is a popular mens hygiene and skincare producer which focuses on organic ingredients and catering to the modern mans hygiene needs. They have three stores in each state with one manager per region. Astur Skincare has contracted EY's assurance team to audit their operation for the 20/21 financial year
- V7 Astur Skincare - Victoria Packaging Warehouse
- Manager: Hey mate, I'm in charge around here, how can I help?
- Astur Skincare are introducing a new range of anti-ageing products. Astur has previously experienced inventory accounting variances and wants to address these before releasing it's new product line
- V8 Astur Skincare - Warehouse Office
- Trainee: I'm quite new at this, the manager told me to enter these numbers
- M: Why do the internal entries not match the purchase order values ?
- M: Did he say why?
- Astur's COO schedules a meeting with M who is in charge of Astur's 20/21 audit. She conveys the CEO's concerns regarding inventory account balances and requests further investigation into inventory accounts and process controls
- V8 Astur Skincare HQ
- CEO: Thank you, I suspected something was up, we will re-evaluate our internal controls and re-structure the packaging operation to create greater accountability
- EY's Assurance Manager M analyses the inventory account transactions for packaging and is skeptical of a string of purchases. Astur's packaging department operates out of a standalone facility with one manager that oversees purchases and conversion of goods to the final product.
- M: The activity of the inventory account seems to be slightly irregular over the month of August compared to the movement in Finished Goods Inventory
- M wants to look at the inventory accounting process and further investigate the anomalous purchase orders. He requests to see receipt of inventory, shipment check documents and the internal systems records for the entry of inventory after receiving these orders
- Manager: I'll pass you on to our trainee, he's been managing all those tasks over the last few months
- M: My team has been contracted to audit internal inventory accounts, I'd like to see the corresponding inventory receipt and entry accounts into your internal system
- After comparing the Purchase Orders to Enterprise System entries, M notices multiple discrepancies. He also finds weaknesses in the inventory receipt process which pose significant risk for misappropriation of assets. Further the manager has no supervision and has placed an inexperienced trainee in charge of tasks for which he is not adequately trained.
- Trainee: He mentioned a special batch of packaging that needed the extra materials
- M communicates the identified misstatements to the CEO of Astur and relays the weaknesses in cost of sales process controls he has identified. M communicates the need for greater monitoring of inventory processes and the delegation of receipt records to a more senior employee. The CEO accordingly inquires into the suspected theft of the companies product.
- M: After further investigating the packaging facility, I've noticed substantial risks in the cost of sales controls. Specific transaction groups also seem to have high fraud risk after discovery of variance between purchasing records and receipt records. I suspect the lack of internal controls may have allowed the opportunity for this to occur.
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