The Peak Sawmill Limited Business Finance Assignment Help

Scenario : (1000 Words)  
The Peak Sawmill Limited (Peak) operates atimber sawmill in a large regional town. It sources its raw material(pine logs) from a number of local growers and from its own plantations.Logs are transported on large trucks that are weighed in on thecompany’s weighbridge and weighed out after dropping their loads in thestorage area. Logs are then debarked and sawn to size in the cuttingarea of the mill. The various logs are then sent to other areas of thesawmill depending on what they will be used for.  
You are a senioron the audit. In the planning stage of the audit, you perform analyticalprocedures. In the current audit period, the average number of days topay creditors has declined significantly from the average recorded overthe past three financial years.  
Your investigation reveals that logsuppliers represent more than 90 per cent of the value of accountspayable. As an internal control, details of the goods received notes arematched against the supplier’s invoice. The accuracy of the invoice ischecked, after which the invoice is authorised for payment by the millaccountant. Any discrepancy between what the supplier’s invoice amountshould be and the actual amount charged by the supplier is communicatedto the supplier by way of a pre-numbered ‘request for credit’ form. Thisform provides reasons for the differences and the amount requested tobe credited to the company by the supplier.  
The correct amount ofthe invoice is entered into the accounts payable accounting system andthe supplier’s monthly statement is reconciled to the accounts payablebalance per the creditors’ ledger at month end. The differences aremostly attributable to:  
 unprocessed invoices due to pricing differences  
 timing differences in the recorded date of a payment made  
 amounts requested for credit  
 settlement discounts disallowed.  
CathyVernon, the company’s financial controller, informs you that due to theincrease in the price of timber, new contracts with suppliers have beennegotiated over the past year. The accounts payable personnel havecomplained that management is too slow in informing them about theeffective dates of the implementation of the contracts and the revisedprices. A brief inspection of the accounts payable reconciliations forfive of the biggest suppliers indicates that many invoices are beingheld back due to the lack of correct pricing.  
(a) List two key assertions at risk in relation to accounts payable.  
(b) Provide your justification for each assertion.  
(c) For each assertion, outline one substantive test of detail to obtain sufficient appropriate audit evidence. 

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