Introduction

CLOUD 9 PTY LTD

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Table of Contents

Task 1. 3

Task 2. 3

Task 3. 4

Task 4. 5

Reference list 7

Task 1

An audit refers to a thorough examination of the financial status of an organization by an auditor by the inspection of various accounts books and along with that a thorough checking of inventory is performed, so that it could be revealed that all departments are following a system that is well documented for recording transactions. Generally, an audit is performed every year to maintain transparency as well as to check the financial history. There is a typical case of a potential interest conflict between W&S partners and Cloud 9 Pty. Ltd. and they approached for tendering for their audit work.

Key issues

The partners should consider the following pieces of information for deciding the tender of the company cloud 9’s audit. Firstly, the director of finance of cloud 9 marries a distant relative of a partner of the audit firm W&S partners. Secondly, the audit firm’s consulting department has tendered for a project of IT installation at Cloud 9 Pty. Ltd. Thirdly, four members of the audit firm have some shares of a retailer that sells the products of cloud 9. Fourthly, according to a newspaper report, the parent company of cloud nine was running secretly running sweatshops of the third world (Bertrand & Parnaudeau, 2019). The above-mentioned set of information is important for the audit firm because, an audit firm needs to consider the history, background as well reputation of the company. Moreover, the audit firm needs to ensure that the acceptance of the client must not have any impact on its existing clients due to conflict of interest.

Task 2

Issues to consider to plan audit work for Cloud 9

The partners should consider the background information of Cloud 9 for completing the audit work of 31 December 2016. According to some pieces of research, the fees of the audit firm is determined by the quality of their services as well as by their reputation as earned from their ranking by the stock market (MohammadRezaei, Mohd-Saleh, & Ahmed, 2018). As a result, the audit firm needs to consider several issues to complete the audit work of the company Cloud 9 in 31 December 2016.

Those issues could be described as follows. Firstly, the director of finance of cloud 9 marries a distant relative of a partner of the audit firm W&S partners. Secondly, the audit firm’s consulting department has tendered for a project of IT installation at Cloud 9 Pty. Ltd. If this tender gets success, the revenue obtained from the project would be double the audit fees. Thirdly, 30 per cent employees of the audit firm have bought the products of Cloud 9.

Fourthly, four members of the audit firm have some shares of a retailer that sells the products of cloud 9. Last but not the least, according to a report of a newspaper, the parent company of cloud nine was running secretly running sweatshops of the third world. The team of the audit firm should have a full understanding of the business environment as well as the structure of the company Cloud 9 based in Australia. However, it is to be considered that there is an important dimension of decisions obtained from human actions and from artificial intelligence (Porayska-Pomsta, & Rajendran, 2019). This understanding is quite essential for the audit firm so that it can estimate the potential risk factors that may have an impact on the financial report of the client.

Task 3

The Cloud 9 Pty Ltd may face cash flow issues because of the following reasons-

Slow business performance

Low earnings are amongst the most likely reasons for money problems. Although working capital and financial gains were also distinct concepts, Cloud 9 Pty Ltd’s operating earnings have one serious influence over its working capital (Omopariola et al., 2019). A decent salary merely indicates that the firm has much cash flow, whereas a middle-wage makes the customer has little money rolling along.

Inefficient cash management

Cloud 9 Pty Ltd must incorporate good liquidity management techniques through maximising cash flow. One method for accomplishing this is to tightly control financial assets. For instance, disobeying up on late fees in credit sales would then cause issues but also cut the levels of income flowing along. Failure to file this same required documentation, such as preparatory notifications, to safeguard one creditor privileges could also have a negative impact on one’s cash flow (VAZOV, 2019). Similarly, maintaining the appropriate quantity of stock is critical, since Cloud 9 Pty Ltd doesn’t even desire to wrap up enough of its money through stockpiles while also being successful in obtaining whatever is needed for such the company’s requirements.

Insufficient cash reserves

Cloud 9 Pty Ltd must always maintain the lowest cash position on hand for usages through any case of emergencies circumstances that could emerge (Agustia, Muhammad &Permatasari, 2020). The quantity of funding set aside must be determined by the organizational requirements. Many times, entrepreneurs don’t even have a sufficient capital safety cushion. As a result, they are underprepared for emergency situations but also unforeseen situations that really are unavoidable.

Task 4

Mitigating factors

Manage unanticipated expenditures

Business activities were also frequently unexpected, but also their resources may be limited. Cloud 9 Pty Ltd can budget for anticipated overhead expenses including such mortgage or infrastructure, equipment, and compensation packages.

Motivate invoice reimbursement as soon as possible

Quicker reimbursement could indeed help with short-term cash flow issues. There are many numerous steps to complete such, but also the enterprise could be imaginative depending on their situations (Bertrand & Parnaudeau, 2019). Customers find it appropriate to meet their obligations internet including a payment method. If customers could indeed make a payment, those who are more prepared to reimburse its bill when it arrives.

Enhance invoicing procedures

They must also computerise one ‘s invoice management scheme since both procedures could indeed assist to money problems besides correcting losses, guaranteeing that everybody continues to receive payments, but also supplying entrepreneurs besides a straightforward screenshot of one ‘s cash balance.

Control their company’s expenditures

Attempting to solve cash flow issues by cutting spending has become a standard technique. Cloud 9 Pty Ltd, on either hand, may approach this in a different manner by slashing bigger expenditures that channelize into income generation. Other cost-cutting metrics which company owners could indeed implement have been listed below (Soboleva et al., 2018). This should assist in improving its cash flow received while not negatively impacting profitability. It’ll also enhance one‘s fixed charge coverage proportion.

References

Agustia, D., Muhammad, N. P. A., &Permatasari, Y. (2020). Earnings management, business strategy, and bankruptcy risk: evidence from Indonesia. Heliyon, 6(2), e03317. DOI: https://doi.org/10.1016/j.heliyon.2020.e03317

Bertrand, J. L., &Parnaudeau, M. (2019). Understanding the economic effects of abnormal weather to mitigate the risk of business failures. Journal of Business Research, 98, 391-402. DOI: https://doi.org/10.1016/j.jbusres.2017.09.016

MohammadRezaei, F., Mohd-Saleh, N., & Ahmed, K. (2018). Audit firm ranking, audit quality and audit fees: Examining conflicting price discrimination views. The International Journal of Accounting, 53(4), 295-313. DOI: https://doi.org/10.1016/j.intacc.2018.11.003

Omopariola, E. D., Windapo, A., Edwards, D. J., &Thwala, W. D. (2019). Contractors’ perceptions of the effects of cash flow on construction projects. Journal of Engineering, Design and Technology. DOI: https://www.emerald.com/insight/content/doi/10.1108/JEDT-04-2019-0099/full/html

Porayska-Pomsta, K., & Rajendran, G. (2019). Accountability in human and artificial intelligence decision-making as the basis for diversity and educational inclusion. In Artificial intelligence and inclusive education (pp. 39-59). Springer, Singapore. DOI: https://doi.org/10.1007/978-981-13-8161-4_3

Soboleva, Y. P., Matveev, V. V., Ilminskaya, S. A., Efimenko, I. S., Rezvyakova, I. V., & Mazur, L. V. (2018). Monitoring of businesses operations with cash flow analysis. International Journal of Civil Engineering and Technology, 9(11), 2034. Retrieved from: https://ogik.ru/efimenko_is/Efimenko_Scopus1.pdf

VAZOV, R. (2019). Inovative Approaches to Insurance Company Cash-Flow Management. Retrieved from: https://www.researchgate.net/profile/Radostin-Vazov/publication/331327390_INNOVATIVE_APPROACHES_TO_INSURANCE_COMPANY_CASH_FLOW_MANAGEMENT_CONTEMPORARY_THEORETICAL_ASPECTS/links/5c73fdd7a6fdcc47159bdc5f/INNOVATIVE-APPROACHES-TO-INSURANCE-COMPANY-CASH-FLOW-MANAGEMENT-CONTEMPORARY-THEORETICAL-ASPECTS.pdf