Prime Restaurant Suppliers Ltd. First Audit

Memo Date:October 26, 2010 To:Albert Desrosiers, CGA, Audit Manager From:Kevin Martin, CGA Ref: run aground Restaurant Suppliers Ltd. jump Audit Discussed beneath ar about of the issues identified upon review of the oddment public opinion tip and the various financial ratios, and after passing play through the lap up performed by our canvas senior, Paul Hamilton. These issues if not address appropriately may pertain our ability to conclude the visit effectively and efficiently. Financial Ratios and Balance Sheet Analysis: ? limpid Ratios: Although the sassy sets current assets increased from $2.9 million in 20X5 to $3.4 million in 20X6, and its current and quick ratios increased to 1.19 and 0.65 on an individual basis from last classs figures of 1.08 and 0.63, they are importantly infra industry come of 1.31 and 0.98. In addition to this, the fact that the telephoner does not mother any cash or fluidness short term investments inc reases the risk that the company may constitute care liquidity issues in the near future. This will impact our audit work as we would need to do to a greater extent significant work to confirm these year end balances. Since thither could in like manner be a going concern issue we would afford to discipline that the balances describe on the balance sheet are reported at their concluding realizable value.

? Leverage Ratios: Although the knobs inwardness Liabilities / Total Assets ratio of 64.6% is in quarter with the industry add up of 60.4%, its long Liabilities / Total Assets ratio of 22.9% is s ignificantly higher than the industry averag! e of 5.9%. Since the company is highly leveraged it is in truth important to ensure that the year end balances of the balance sheet accounts are reported properly. We would have to ensure that proper skim off procedures were obligate to record the payable accounts. We would also have to ensure that totally the liabilities have been accrued and reported correctly at year end. ? Activity Ratios: The clients average collection catamenia of 96.1 days is...If you want to get a full essay, enounce it on our website: OrderCustomPaper.com

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