Statement Of Financial Position - Sole Trader

ASSETS $ $ $

Statement Of Financial Position - Sole Trader

$ CAPITAL AND LIABILITIES $ $

Non-current assets Land and buildings Office equipment Motor vehicles Furniture and fixtures Current assets Inventories Trade receivables Less: allowance for doubtful debts Prepayments Cash in hand and at bank Total assets

100,000 50,000 30,000 20,000 200,000 50,000 30,000 (2,000) 28,000 5,000 7,000 90,000 290,000 www.bp pbus iness .com

Capital Capital Profit Less: drawings Non-current liabilities Bank loans Current liabilities Bank overdraft Trade payables Accruals Total capital and liabilities

170,000 45,000 (25,000) 190,000 40,000 16,000 40,000 4,000 60,000 290,000 www.bp pbus iness .com

Audit Process

Plan the audit Understand entity Assess risk of material misstatement Respond to risk

Expect effective controls Unsatisfactory Tests of controls

Expect ineffective controls

Report to management Satisfactory Restricted substantive tests Full substantive tests Overall review of F/S Auditors report Report to management

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Income Statement Sole Trader

Income statement for the year ended 31 December 20X1: $ $ Sales Less: Cost of sales Opening inventories Purchases Carriage inwards Closing inventories Gross profit .continued on next slide 200,000 40,000 110,000 20,000 170,000 (50,000) (120,000) 80,000 Trading account

Income Statement Sole Trader

$ Gross profit (from previous slide) Sundry income Discounts receivable Less: Expenses Rent Carriage outwards Telephone Electricity Wages and salaries Depreciation Bad and doubtful debts Motor expenses Discounts allowable 11,000 4,000 1,000 2,000 9,000 7,000 3,000 5,000 1,000 (43,000) 45,000 $ 80,000 5,000 3,000 88,000

Profit for the period

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Examples Of Internal Controls

Authorisation Computer controls eg passwords Arithmetical accuracy - recalculation Bank / Control account reconciliations Segregation of duties Physical controls Personnel controls
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Auditors

Purpose Of External Audit

Audit

Appoint independent Measure performance

Auditor Adds Credibility Financial Statements Appoint

External auditors

Internal auditors

Prepare Directors Manage

Shareholders

Report to members (shareholders)

Report to management
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Own

Company

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True And Fair

Audit Opinion Accounts should give a fair presentation ie a true and fair view
...financial ...financialstatement statementare arefree freeof of material materialmisstatement misstatement An item is material if its omission or misstatement affects the economic decisions of the users of financial statements. Independent Independentopinion opinionon onthe thefinancial financialstatements statements enhancing enhancing credibility credibility

Information is not false, but factual & conforming with reality.

Information is free from discrimination and bias

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free of of material material misstatement misstatement free comply comply IAS IAS and and CA CA 2006 2006 not not subject subject to to management management bias bias
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Audit Report
Basic elements of the auditors report The auditor's report should include the following basic elements, normally in this order: (a) Title (b) Addressee (c) Introductory paragraph (d) Managements' responsibility for the financial statements (e) Auditor's responsibility (f) Auditor's opinion (g) Other reporting responsibilities (h) Auditor's signature (i) Date of the auditor's report (j) Auditor's address

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