Audit Memo


Institutional Affiliation

Audit Memo

审计assignment代写 Enterprise risk refers to the risk that may affect the businesses in a negative light particularly on the···

Enterprise Risk 审计assignment代写

Enterprise risk refers to the risk that may affect the businesses in a negative light particularly on the financial statements such that . The accounts do not reflect the true and fair value or may negatively affect the business operations. Some of the risks affecting the business include:

1.Inherent risk

This refers to the risk that the account balances or class of transactions are materially misstated either individually . Or when they are aggregated together as a group. In businesses, various factors may enhance the probability of these inherent risks occurring . Such factors may include situations when the management’s performance is pegged on profitability.

This can be seen as a risk for NAII especially with the stock-based compensation that has been put in place. When this is the case profits can be manipulated in order to favor the said parties particularly the directors. Under the incentive plan that was approved by the directors, it is well within their power to provide nonqualified . And incentive stock options and other awards to employees.

Another factor that can easily accelerate the inherent risk would be the nature of the business product, and mainly . In this case, the company NAII offers leading formulator . And marketer of nutritional supplies. In this line of business, there are several lines of products it deals with particularly the scientific research . And clinical studies which may be quite difficult to quantify as it is a service . And with such the services can easily be misappropriated or misstated.

2.Credit Risk 审计assignment代写

This is another potential risk likely to face the firm especially in terms of liquidity risk. This type of risk would translate to the fact that the company is not able to meet its daily operating need . As well as being able to pay its creditors. The organization placed its cash with some very high financial instructions while in respect to its debtors . Their three largest clients represented to an average of about 73% of the total debtors . Which means it is basically holding up your cash rather than receiving the cash and meeting its operation needs as well as the organization can re-invest such cash.

3.Foreign Exchange risk

This refers to the risk that the company will face due to the fluctuation in the foreign exchange rate. The uncertainty in the rate may end up causing or having a financial impact on the company. To be more specific this fluctuation may either cause gains or losses to the company. The company is affected in two ways in terms of the exchange rate that it is.

The company has a foreign subsidiary hence all the transaction that . The company makes with the foreign subsidiary have to be converted using the existing foreign exchange rate at that time. Another way the company is affected is in terms of the sales that the companies make to foreign countries which . Must be made using the foreign currencies of that country.

Information Risk 审计assignment代写

This refers to the type of risk that is most likely to face the users if the published financial statements contain a misleading piece of information . And the said users rely on the said information. Users of this financial information can include:

1.Potential Investors

These refer to the capital providers, and their advisors are normally concerned with the ability of the company to pay dividends. They are more interested in the return on their investments. From the financial statements of NAII, they are interested in the income statement specifically the dividends paid out.

2.Employees 审计assignment代写

They are users of the information particularly the profitability of the company since if the company is profitable . It will be able to pay their salaries.



These are the clients that the company NAII services . And hence they are interested in the going concern of the company that is the continuity of the enterprise if they have a long-term investment with the company. The going concern of the can be clearly since it has non-current liability . Which refers to liabilities that the company intends to pay after more than twelve months.

Some of the areas that might require special attention during the audit might include areas such as: 审计assignment代写

a.The adoption of the recently adopted accounting pronouncements . Which specifically is the revenue from contracts with customers which means we as the auditors need to ensure that this accounting standard has been fully adopted and well implemented.

b.Another area that may require special is the stock-based compensation plan that was implemented. This requires special attention in order to ensure that it is not used a money laundering scheme . By the management in the name of an incentive plan.

c.Lastly, another critical area that may require the auditor’s essential attention is the contingencies section . Which might pose a legal risk to the company. The auditors need to identify the reason why the company is facing such contingencies particularly the lawsuits.

Engagement Risk 审计assignment代写

An engagement is a contact sent by the auditor to the client briefly outlining the scope of the work and the various responsibilities of the auditor, therefore, minimizing misunderstanding of the auditor’s role. One of the critical objectives of this letter or contact is that it confirms the auditor’s acceptance and in so doing it affirms any verbal communication between the auditor and the client.

Therefore the engagement risk will be the risk faced by the auditor if the contents or purpose are wrongly misrepresented such that the clients misunderstand the role of the auditor or in this case of NAII, the auditor does not do proper client screening and background check of the client and as a result once they accept the client, whatever risks they face down the line is their own fault.

Some of the changes that have taken place since the June 2018 audit . 审计assignment代写

And where attention needs to be focused on is the company . NAII started dealing with new products particularly the private label contract manufacturing. The sales for this new product pose a significant risk to the company since the company might not have the legal knowledge in regards to dealing with that product.

This will pose a threat to the auditors since, we as the auditors need to acquire the necessary knowledge, skill and at times will need to acquire the necessary. There is also another engagement risk that the auditors might face which is the technical risk in terms of understanding the shipment process of the new products.

Materiality 审计assignment代写

From the balance sheet, the allowance for the doubtful debts can be taken as material in respect to the account’s receivables. However, this allowance can only be material to the debtors but are not pervasive to the entire financial statement.

From the statement of the comprehensive statement of income, the unrealized gains or losses arising from the change in fair value of derivative instruments. This aspect is material but not pervasive and hence we as the auditors can only issue an except for opinion. From the same statement, there is provision for the income taxes, this provision can end up being material in terms of the actual taxes for the year can end up being higher or lower than the provision, and this might end up being material to the financial statements.


References 审计assignment代写

Natural Alternatives International, Inc. (NAII) SEC Filings. (n.d.). Retrieved from

Naii20181231_10q.htm. (n.d.). Retrieved from


























Natural Alternatives International, Inc. (NAII) SEC Filings. (n.d.). Retrieved from

Naii20181231_10q.htm. (n.d.). Retrieved from