To: Audit Manager
From: Ryan OLeary
RE: Audit Plan Carewell Connections (Canada) Ltd. (CCC)
Information has recently come to my attendance from a former CCC employee that might affect the scrutinise plan regarding CCC. As planning for this audit is scheduled to incur get through next week, I would like to bring it to your attention.
We have well-educated from the Vancouver office that CCC might be having cash bleed issues as there have been some employees laid off and severance packages were pay. Another piece of information learned was that at least one of the severance packages paid was paid by Worldwide Connections Inc.
Effect on Audit Plan
Audit guess of CCC should be reassessed in regard to the cash bunk problems as there could be a going stir issue or maybe reporting discontinued opeproportionns if this employee and others laid off were part of a specific division. excess substantive audit procedures should be carried out to ensure intercompany minutes are being dealt with properly as the severance payments were paid by Worldwide, we must ensure that these are recorded correctly in the books. A walkthrough should be carried out regarding the payroll wheel around to make sure all amounts are correctly recorded.
pecuniary Ratios
Specific financial ratios that should be looked at during the audit that would be indicative of a cash flow concern include, except are not limited to:
Quick Ratio
Current Ratio
Debt reporting Ratio
Receivables Turnover Ratio
These ratios should help determine whether or not the entity has becoming cash or liquid assets to meet their obligations. Should the company be having cash flow issues, additional disclosure in the financial rumors may be required. This would be the case if a ratio was in violation of a banking agreement or debt cartel and the debt could then be called at any time, financial statement users would need to be aware of this.
Ethical Issues
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