PwC IEUK

work sample
Project book - June 2023
How to use this book
Welcome to the PwC IEUK work sample
Over the next two days, you’ll be working through an audit for a fictional client,
Sustedible. There’s four tasks for you to complete as you work through the project.
They’re entirely fictional, but they’ll give you a flavour of the work we do in Audit.

We’ve suggested how long you might want to spend on each task as a guide, but you’ll
need to manage your own time, and work through the tasks sequentially. For each task,
you’ll see some instructions from your team, supporting documents and evidence from
the client. You can also conduct your own research to help you.

The project book includes editable sections so you can complete the worksheets in here
without having to print them off. To edit the document you’ll need to download the
project book and save it to your computer. Remember to keep pressing ‘save’
throughout the day so you don’t lose your work.

PwC 2
 Task 1: PESTLE Analysis
Political
• Government regulations and
policies regarding food safety
and sustainability could impact
the operations and supply chain.
• Taxation policies and
import/export regulations might
affect the cost of ingredients
and shipping.
• Political stability and potential
changes in government can
influence consumer confidence
and spending behavior.
PwC
Suggested time for this task: 1-1.5 hours
Economic Social
• Economic fluctuations can • Growing awareness and interest
impact consumer spending on in sustainable and organic food
luxury or premium food can be a positive factor for the
products. business.
• Inflation rates can affect the cost • The popularity of comfort food
of ingredients and production and home-cooked meals may
expenses. align with the offerings.
• Exchange rates may impact the • The influence of social media
cost of imported ingredients or and influencers can greatly
packaging materials. impact the brand visibility and
• Unemployment rates and sales.
income levels can affect the • Dietary preferences and food
demand for the premium food trends may influence the menu
products. choices.
3
 Task 1: PESTLE Analysis
Technological
• Issues with the e-commerce
platform can lead to customer
dissatisfaction and decreased
sales.
• Technological advancements
may allow for more efficient and
sustainable farming and
production methods.
• Online marketing and social
media can be powerful tools to
reach a wider audience and
engage with customers.
PwC
Legal
• Compliance with food safety
and labeling regulations is
essential for the business.
• Intellectual property rights, such
as trademarks for your brand
name and logo, need to be
protected.
• Labor laws and regulations
regarding employment may
affect the workforce.
Environmental
• The focus on sustainability
aligns with the increasing
demand for eco-friendly
businesses.
• Climate change and extreme
weather events can impact the
farm's productivity and supply
chain.
• Sustainable packaging choices
and reducing plastic waste can
positively impact the brand
image.
4
 Task 1: Notes

Use this space to record any notes

Overall, the food delivery business seems to be in line with many current trends and consumer
preferences, especially with a focus on sustainability, organic food, and working with local
suppliers.

However, addressing the issues with your e-commerce platform is crucial for ensuring a smooth
customer experience and successful online sales. Additionally, staying up-to-date with changing
regulations and market trends will help you maintain a competitive edge in the industry.

PwC 5
 Task 2: Sustedible Suggested time for this task: 30 minutes
Balance Sheet
In-Scope? In-Scope?
Balance Sheet (tick) 2022 £000s 2021 £000s Profit and Loss (tick) 2022 £000s 2021 £000s

ASSETS
Fixed Revenue ✓ 5,000 4,000
Property, Plant and Equipment ✓ 1,500 500 Cost of Sales (170) (136)
Current 4,830 3,864
Gross Profit
Cash 20 10
Accounts Receivable 20 15 (200) (150)
Inventory ✓ 400 300 Admin
(250) (250)
Total Assets 1,940 825 Distribution
4,380 3,464
LIABILITIES Profit from operations
Long Term
Borrowings ✓ (200) (300) ✓ (500) 0
Exceptional Items
Current 3,880 3,464
Profit before Tax
Accounts payable ✓ (50) (60)
Tax ✓ (10) (50) (780) (693)
(10) (20) Tax
Other
3,100 2,771
Total Liabilities (270) (430) Profit after Tax

NET ASSETS 1,670 395 1,275 2,771

Profit for the year
EQUITY
Share capital 20 20
Retained Earnings ✓ 1,650 375
1,670 395
Materiality should be set at:
Total Equity

Why?

PwC 6
 Task 2: Notes

Use this space to record any notes

PwC 7
 Task 3a: Stock count Suggested time for this task:15 - 30 minutes

Count the number of units held for each item and multiply it by the value per unit. This give us the total value
of stock per item. Sustedible have completed their own stock count. As their auditors, we need to verify
this.
Total value held Number
Stock item Value per Total value
Stock description Units held as per stock verified via Misstatement?
number unit stock held
listing stock count
Chicken Tikka 11 66 6
001 -1000 10 £6 £60
Masala
001 -1001 Lamb Ragu 7 £6 £42 7 42 0

Creamy Chicken 7 42 (6)

001 -1002 8 £6 £48
Tarragon
Aubergine 4 42 6
001 -1003
Lasagne 6 £6 £36

001 -1004 Lentil Chilli 8 £6 £48 8 48 0

001 -1008 Proper Mash 10 £3 £30 8 24 (6)

5 15 (3)
001 -1011 Mixed Salad 6 £3 £18
279
TOTAL £282

PwC 8
 Suggested time for this task: 30 mins
Task 3b: Inventory
Item Quantity Historical Value Total Historical Value Total NRV

Mains Chicken Tikka Masala 75 £1.50 112.5 187.5

34 £2.10 71.4 85 Net Realisable Value

Lamb Ragu
Mains : 6 - (2 + 1.5) =
Creamy Chicken Tarragon 46 £1.33 61.18 115
2.5
Aubergine Lasagne 14 £0.98 13.72 35
Sides: 3 - (2 + 0.5) =
Lentil Chilli 24 £1.05 25.2 60
0.5
Prawn Red Curry 35 £2.75 96.25 87.5

Traditional Fish Pie 35 £2.45 85.75 87.5

Sides Proper Mash 75 £0.86 64.5 37.5

Marketing costs (inc
77.6 40 social media)
Triple Cooked Chips 80 £0.97
£2 per item
Fresh Greens 56 £0.84 47.04 28 Modification costs
(e.g. cooking,
Glazed Carrots 45 £0.82 36.9 22.5 preparing, packaging)
50.56 32
£1.50 per main
Mixed Salad 64 £0.79
£0.50 per side
Total Inventory value: 742.6 817.5
PwC
 Task 3: Audit procedures Suggested time for this task: 1-1.5 hours
(b, c & d)
How much should the total 742.6 Is Sustedible’s NO
inventory be valued at in the valuation correct?
financial statements?

Have the sales been What risks might we What is our role as
recorded accurately? Are encounter as auditors? Did auditors in dealing with
there any discrepancies? you encounter any? those risks?
1. Revenue Recognition Risk:
There may be instances where sales are recorded Risk Assessment:
No, Dispatch number 10048, prematurely or inappropriately, leading to incorrect
10049, 10173, 10174 are not Audit Planning:
revenue recognition. Substantive Testing:
correctly calculated 2. Inventory Valuation Risk: Analytical Procedures:
Inconsistent or incorrect inventory valuation methods, Internal Control Evaluation:
such as the use of historical cost or market value, can Fraud Detection:
impact the accuracy of the total inventory value. Data Verification:
Errors or inaccuracies in physical inventory counts can
lead to misstatements in the total inventory value.
3. Data Accuracy and Integrity Risk:
Mistakes during data entry can result in inaccurate sales
and inventory records.
4 Fraud Risk:
The risk of intentional misstatements in sales data to
inflate revenue.

PwC 10
 Task 3: Notes

Use this space to record any notes

PwC 11
 Task 4: Closing the audit Suggested time for this task: 1-1.5 hours

Clearance agenda Auditor’s opinion

Inventory Count Discrepancies:
need to Discuss the inconsistencies in the inventory count and how it impacts the accuracy of the inventory
valuation.
need clarification on the reasons for the incorrect inventory count and whether there were any specific Draft Summary of Auditor's Viewpoint:
challenges during the count process.
need to Discuss potential solutions to improve the accuracy of future inventory counts, such as implementing Based on the findings during the audit, it is evident that there are
regular cycle counts and improving inventory tracking systems.
significant issues with the client's inventory counting process and sales
Sales Recording Errors:
need to Address the issue of wrong sales being recorded, leading to incorrect revenue recognition. recording, leading to material misstatements in the financial statements.
Inquire about the root causes of these errors and whether there are any underlying issues in the sales The inaccuracies in inventory valuation and revenue recognition call
recording process. into question the reliability and accuracy of the financial statements. It is
need to Discuss ways to enhance controls and procedures to prevent such errors in the future, such as essential for the client to address these issues promptly and implement
implementing dual authorization for sales transactions and conducting regular reconciliations. robust internal controls and policies to prevent such errors in the future.
Software Reliability: By tightening up their controls and implementing better tracking
need to Evaluate the effectiveness of the current software used for inventory valuation and sales recording. systems, the client can ensure a more accurate representation of their
need to Discuss potential software upgrades or alternative solutions that can provide more accurate and business's performance in their financial statements. As auditors, we
reliable calculations. will need to work closely with the client to resolve these issues and
Consider the need for additional training for staff using the software to ensure proper utilization and data
obtain sufficient, accurate evidence before finalizing the audit report.
entry.
Internal Controls and Policies:
need to Discuss the effectiveness of the client's current internal controls related to inventory management
and sales recording.
need to Emphasize the importance of strong internal controls to mitigate the risks of errors, fraud, and
inaccuracies.
Materiality and Financial Reporting:
need to Address the impact of the identified errors on the overall financial statements.
need to Discuss whether the errors are material to the financial statements and if they require restatement or
disclosure in the notes to the financials.

PwC 12
 Task 4: Notes

Use this space to record any notes

PwC 13