June Journal - 2nd Week

 WEEK 2

Date:  10 June 2024 - 14 June 2024
Day : Monday - Friday
Location :  SK Berhad, Muar

Time: 8.30 a.m - 7.00 p.m

TASKS OF THE WEEK 

Third Engagement at SK Berhad

Day 51 ( 10 June 2024)

Performing Sales Cycle and Revenue Working Papers

In the third engagement, I traveled to Muar to work with our client, SK Berhad. The audit team consisted of five members and was led by Ong Kean Heng, who served as the senior in charge during the interim. SK Berhad consists of seven subsidiaries, including SKB, SKPW, SKF, SKFI, VPM, SKSFD, and ST.

On the first day, I was assigned to focus on the sales cycle's Test of Controls (TOC) and perform a walkthrough of the relevant processes. Before diving into the task, I made it a priority to thoroughly understand the working papers associated with the sales cycle. This foundational knowledge was crucial for effectively assessing the internal controls in place and identifying any areas that required further attention.

Lessons Learned:

From this experience, I learned the critical importance of fully understanding the working papers before beginning any audit tasks. Familiarizing myself with the details allowed me to perform my responsibilities more efficiently and effectively. It emphasized that a solid grasp of the existing documentation is essential for conducting meaningful tests and evaluations.

Additionally, I recognized the value of the walkthrough process in understanding the flow of transactions within the sales cycle. This practical approach helped me identify potential weaknesses in internal controls and equipped me to contribute more effectively to the audit team’s overall objectives.

Day 52 ( 11 June 2024)

Performing Sales Cycle and Revenue Working Papers

On the  second day, I focused on understanding the flow of the purchase cycle and selecting samples for the Test of Controls (TOC). I chose samples from each month, ensuring that if the number exceeded twelve, I left some space for additional samples for the final audit. Since this was an interim audit, I paid careful attention to the relevance of delivery dates and invoices.

Lessons Learned:

Throughout the day, I recognized that thorough reviews and amendments are essential steps in ensuring compliance with auditing standards, highlighting that collaboration within the team can significantly enhance the quality of our outputs.

Day 53 (12 June 2024)

Performing Sales Cycle and Revenue Working Papers

I also focused on performing working papers related sales for the SK Berhad and its subsidaries. 

Lessons Learned:

I learned the critical importance of thoroughness when dealing with related party transactions. Understanding the implications of these transactions is essential for accurate financial reporting, as they can introduce complexities that affect the overall integrity of the financial statements. I also recognized the significance of adhering to accounting standards and regulatory requirements, as proper documentation and disclosure are vital for maintaining stakeholder trust.

Day 54 ( 13 June 2024)

Performing Sales Cycle and Revenue Working Papers

Continuing the tasks by performing the revenue working paper, I focused on the PM (Performance Materiality) value and risk assurance to determine the appropriate number of samples to test for each subsidiary. Understanding PM was crucial, as it helped me establish a threshold for materiality that guided my sampling strategy. By aligning the sample size with the assessed risks of material misstatement, I ensured that my testing was both effective and efficient.

Lessons Learned:

Through this experience, I learned several important lessons. First, I gained a deeper understanding of how PM influences audit strategy, emphasizing the need to tailor our approach based on the unique risk profile of each subsidiary. Additionally, I recognized the importance of risk assessment in determining sample sizes, as it ensures that our testing effectively addresses potential vulnerabilities in financial reporting.

Day 55 ( 14 June 2024)

Performing Sales Cycle and Revenue Working Papers

The next day, I continued my work by performing the revenue working papers for four more subsidiaries.  I became more proficient in tailoring my sampling strategies to align with the specific characteristics of each entity. I learned to recognize that even within a single corporate group, variations in operations and control environments can significantly influence how revenue is recorded and reported.

Lessons Learned:

 I improved my analytical skills by comparing revenue trends across the subsidiaries. This comparison provided insights into potential anomalies or areas requiring further investigation. By examining how revenue recognition practices varied, I gained a more comprehensive perspective on the overall financial health of the organization.