Auditing - Analytical procedures regarding financial and non-financial information

1. ANALYTICAL REVIEW
PRESENTING BY:
SYAFIQAH NADHIRAH
NUR UMI HANI
NAJEA
ASIAH KAMILAH
NORSHAKIRAH
ANALYTICAL PROCEDURES

2. COMPANY
BACKGROUND

3. STRUCTURE OF
CEMENT INDUSTRIES MALAYSIA BERHAD
KHAZANAH
NASIONAL
BERHAD
UEM GROUP
CIMA
UEM Group wholly
subsidiary by
Khazanah
Nasional Berhad
CIMA wholly
owned by UEM
Group

5. Nature
Purposes
These may be achieved through the consideration of comparisons of the
entity’s financial information with, for example:
• Comparable information for prior periods
• The entity’s anticipated results
• Similar industry information
 To examine both financial data and non- financial data, such as the
number of employees.
 To estimate the expected value (of the ratio/ trend/ account balance/
transaction, etc.)
 To identify unusual transactions or event and amount, ratios and
trends.

6. Final analytical review
Sources of information
 Financial report
 Budgets
 Non-financial information
Involving the process of review the trial balance, financial statements, and
footnotes to:
 Judge the adequacy of the evidence
 Determine if any other unusual balances/relationships have not
been investigated

7. 2.0 STEPS TAKEN IN ANALYTICAL PROCEDURES:
Step 1: Develop an
Expectation
Step 2: Identify (actual)
material discrepancies
Step 3: Investigate:
inquiry AND
corroborating evidence
Step 4: Evaluation:
decide if there is material
misstatement or not
IF REASONABLE STOP HERE
Have develop expectation – sales & revenue will
increase, cost of production increase
Where there is significant fluctuations or info is
differ from expected values by significant amount
Either the expectation and actual information has
tolerable differences or is significant
The result from inquiry will be evaluated, it may be
material misstatement if the transaction has
significant fluctuations without any explaination.

8. 3.0 COMPARISON ON FINANCIAL STATEMENT INFORMATION:
3.1 BUDGETS & FORECAST
Production &
Sales budget
Based on
demand 
annual cement
consumption
Demand drivers;
economic growth,
industrial activity,
real estate biz &
construction activity
The budgeted
production and sales
increase by 6% as
expected annual cement
consumption to cross
17.5 million tons by end
2013.

9. 3.2 UNUSUAL FLUCTUATIONS
 Required during the planning and completion phases on all audits.
3.0 COMPARISON ON FINANCIAL STATEMENT INFORMATION:
significant difference are not
expected but DO exist
significant difference are
expected but DO NOT existOR
• SALES
• INVENTORIES
• DEBTORS
• CREDITORS
• OTHER OPERATING EXPENSES

10. UNUSUALFLUCTUATIONS

11. 3.0 COMPARISON ON FINANCIAL STATEMENT INFORMATION:
3.3 RATIO & ANALYSIS

12. 3.0 COMPARISON ON FINANCIAL STATEMENT INFORMATION:
3.3 RATIO & ANALYSIS
LIQUIDITY RATIOS & OPERATIONAL EFFICIENCY RATIO

13. EVALUATIONS:-ANALYSIS Liquidity Ratio
Current Ratio
Recession over the two-year period from
1.85 (2011) to 1.35 (2012).
• Has fewer current assets to cover its
current liabilities
• Working capital of CIMA finally
become negative in 2012
Other businesses within the same
industry have greater ability to use
current assets to pay short-term
debt.
Quick Ratio
Recession over the two-year period from
1.27 (2011) to 0.98 (2012)
• Company’s immediate short-term
liquidity is at bad position.
Other businesses within the same
industry have greater ability to use their
current assets (excluding inventory) to pay
or meet their short-term debt.
CIMA's quick ratio is below the industry
average BUT no indication that the
company struggling

14. EVALUATION ANALYSIS:- Operational Efficiency Ratio
Receivable Turnover
4.145 times over the 2011-2012, (2011
being the highest
•Unable to quickly & efficiently
collect its outstanding receivables
4.15 times a year  shows bad
liquidity positions.
Much lower than the industry
average for the two companies,
•Apparent problems with collecting
accounts receivable.
Inventory Turnover
Gradually increased 2.80 to 3.53
• the liquidity of the company’s
•inventory is at good position.
Consumed its inventory
approximately 3.53 times in 2012.
•Considerably lower than the industry average
of 6.75 times
As a result, CIMA has more money
"tied up" in inventory than other
firms within the same industry.

15. 3.0 COMPARISON ON FINANCIAL STATEMENT INFORMATION:
3.3 RATIO & ANALYSIS
PROFITABILITY RATIOS

16. 3.0 COMPARISON ON FINANCIAL STATEMENT INFORMATION:
3.3 RATIO & ANALYSIS
SOLVENCY RATIOS

17. 4.0 COMPARISON ON NON-FINANCIAL DATA:

18. 4.0 COMPARISON ON NON-FINANCIAL DATA:

19. ANALYTICAL PROCEDURES