You are an audit manager at Oscar Edwards Vance (OEV), an accounting firm with offices throughout regional Australia in major centres such as Bathurst, Goulburn, Coffs Harbour and Armidale in NSW, Warwick in Queensland and Bendigo in Victoria. OEV is a medium-sized auditing firm by national standards and most of its clients operate within the manufacturing and service industries. During early July 2019, you met with the audit senior of OEV, Jack Higgins, to discuss a range of findings related to various clients of OEV.
Impact of business risk at Bowlby Ltd Bowlby Ltd is a manufacturer of small tools including screwdrivers, hammers and plyers with a plant in Goulburn NSW. Competition from imported goods in this industry has become increasingly fierce, yet Bowlby has traditionally chosen to address these competitive pressures by differentiating its products from imported rivals by focusing on quality rather than cost. Recently, Bowlby has pursued a new manufacturing process that purports to maintain quality while reducing manufacturing time and therefore costs. Unfortunately, there has been an increased number of complaints from customers which could be attributed to a potential drop in quality.
Using analytical procedures to assess risk at Zing Ltd Zing Ltd manufactures work boots out of its factory in Bendigo, Victoria. Jack has calculated the following ratios for you to discuss.