Audit risk assessment
Affected positions in the
Existing information and control
High/material risks
environment
Non-current assets • The hotel properties are periodi-
cally valued by
The valuation of non- external specialists.
current assets is above
the legal maximum. • There are authority rules in
place for investments.
• Asset accounting is reviewed on
a quarterly basis, and spending
is compared
against the budget.
• The Board of Directors is in-
formed on a half-yearly
basis of any material changes.
Trade receivables: Payment behaviour varies, and
prepayments are increasingly
The recoverability of required for large private events.
individual receivables is
questionable.
Inventories: In our previous annual audits, we
repeatedly identified inexplicable
The reported stocks do
differences in the stocks held,
not match the actual
particularly for wine.
stocks.
The hotel has introduced new
inventory management software
this financial year. We have not yet
been able to check its implementa-
tion. There are still some manual
steps involved.
Audit strategy/assertions/audit
annual financial state-
procedures
ments
- Property, plant and We audited the internal control system (invest-
equipment ment, valuation and depreciation procedures)
during the interim audit and found that the ICS
- Other investments was appropriate and functioning properly.
- Depreciation The external estimate of market value was con-
- Other operating expens- ducted by a recognised expert in hotel properties.
As far as we could ascertain, the valuer was
es
independent of the hotel’s management.
- Extraordinary in-
come/result from the We conduct an analytical year-on-year compari-
disposal of non-current son as part of the audit of the annual financial
assets statements.
- Trade receivables from 1. Analytical checks
third parties
• Analysis of changes/year-on-year compari-
- Bad debt provisions son/sales trend/accounts receivable
- Income from trade re- • Critical review of OP list: age structure and large
ceivables receivables
2. Checks on individual cases
• Obtain balance confirmations
• Check appropriateness of bad debt provisions
• Check incoming payments
• Correct entry of prepayments
- Inventories 1. Analytical checks
- Depreciation of invento- • Review of wine inventory/plausibility of data
ries
2. Checks on individual cases
- Materials and stock
• Inclusion in inventory
expenses
• Completeness of general ledger (reconciliation
of general ledger and subledger)
• Valuation/one-third of inventory value