June Journal - 4th Week

WEEK 4

Date:  24 June 2024 - 28 June 2024
Day : Monday - Friday
Location : BDO Office, Level 18, Menara Zurich
Time: 8.30 a.m - 7.00 p.m

TASKS OF THE WEEK 

Back to BDO Office

Day 61 ( 24 June 2024)

Preparing A2 and Choose Samples for Asset Sighting

After two weeks at the client’s site, the audit team returned to the office to update and tidy up the working papers. On this day, I was tasked with preparing working paper A2 and selecting samples for asset sightings. I ensured that the asset codes were identifiable and that the amounts recorded in the working paper accurately matched the carrying amounts provided by the client. All listed assets would be sent to the accountants in charge for each company. We need to perform asset sightings and stocktake across four locations: Pahang, Kelantan, Klang, and Muar.

Lessons Learned:

Through preparing this working paper, I learned the critical importance of accuracy and attention to detail in asset management. Ensuring that asset codes are properly identified and that recorded values align with the client’s records is vital for maintaining the integrity of financial statements. This experience also reinforced the need for thorough communication with the accounting team, as collaboration is essential in verifying asset information. Additionally, I recognized the logistical challenges involved in coordinating asset sightings across multiple locations, emphasizing the necessity of effective planning and organization in audit processes.

Day 62 ( 25 June 2024)

Updating inventories cycle

The next day, I focused on updating the inventory cycle within our working papers. This involved reviewing the existing documentation related to inventory transactions and ensuring that all data accurately reflected the client’s records. I analyzed inventory counts, assessed the valuation methods used, and verified that proper controls were in place to manage inventory levels effectively.

I also examined any discrepancies between the recorded inventory and the physical counts, ensuring that all adjustments were documented appropriately. This process required close collaboration with the accounting team to confirm that inventory practices complied with relevant accounting standards.

Lessons Learned:

Through this experience, I learned the importance of thoroughness and precision when updating inventory cycles. Maintaining accurate inventory records is crucial for assessing a company's financial health and ensuring reliable financial reporting. Additionally, I recognized the value of cross-functional teamwork; collaborating with the accounting team not only clarified processes but also helped in identifying potential areas for improvement in inventory management. This reinforced my understanding that effective communication is key to a successful audit and to achieving accurate and transparent financial reporting.

Day 63 (26 June 2024)

Updating  Trade Receivables Aging Report

The next day, I updated working paper D, which focused on the trade receivables aging report. This task involved reviewing the client’s accounts receivable records and categorizing outstanding invoices based on their age—current, 30 days, 60 days, and over 90 days. I ensured that the report accurately reflected the amounts owed and assessed the collectability of these receivables.

I cross-referenced the aging report with the general ledger and followed up on any discrepancies or overdue accounts. Additionally, I worked closely with the accounting team to understand their credit policies and the reasons behind any significant aging balances. I also learned to perform this task efficiently using VLOOKUP formula, which helped streamline the process of matching data across different spreadsheets.

Lessons Learned:

From this experience, I learned the significance of monitoring trade receivables and the impact of aging on a company’s cash flow. Understanding the aging report is essential for identifying potential collection issues and evaluating the effectiveness of the client’s credit management practices. Additionally, mastering VLOOKUP enhanced my efficiency in data analysis, allowing me to quickly locate and verify information. This task underscored the importance of thorough documentation and analysis in assessing credit risk, reinforcing my skills in financial analysis and my ability to provide valuable insights during the audit process.

Day 64 ( 27 June 2024)

Updating A2 Working Paper - Insurance Policy

The next day, I focused on updating Working Paper A2, specifically related to the insurance policies of the client. This involved requesting the necessary insurance documentation from the client via email. Once I received the policies, I meticulously reviewed each document to ensure they were valid and accurately reflected the coverage amounts and terms.

I then vouchered the insurance details in the respective working paper, ensuring that all information was clearly documented and aligned with the client’s financial records.

Lessons Learned:

Through this process, I learned the importance of clear communication when requesting documentation from clients. Crafting precise and professional emails helps facilitate a smooth information-gathering process. Additionally, I recognized the significance of thoroughly reviewing insurance policies, as they can significantly impact financial statements through the assessment of liabilities and potential claims. This experience reinforced my attention to detail and enhanced my ability to manage and document client communications effectively.

Day 65 ( 28 June 2024)

Updating Slow - Moving Inventories Working Paper 

The next day, I focused on updating working paper C, which dealt with slow-moving inventories. This task involved analyzing the inventory records to identify items that had not sold within a specified timeframe and were therefore classified as slow-moving. I reviewed the historical sales data and compared it against the current inventory levels to determine which items needed to be flagged for further evaluation.

After identifying the slow-moving items, I calculated any necessary provisions for obsolescence and documented the rationale behind these decisions in the working paper. This ensured that our reporting accurately reflected the potential risk associated with holding such inventories.

Lessons Learned:

I learned the critical importance of inventory management and its direct impact on financial health. Understanding slow-moving inventories helps in assessing potential losses and informs strategic decisions regarding stock levels. Additionally, I enhanced my analytical skills by learning to evaluate sales trends and inventory turnover rates, which are vital for effective inventory management. This task underscored the need for thorough documentation and analysis, as well as the importance of proactively addressing potential issues related to inventory valuation.