MAA303 Audit and Assurance - Chapter 3: Risk assessment I

3.29  Closing procedures

Abacus Ltd sells office equipment and supplies. In recent years, it has faced increasing competition from a chain of office supplies stores which is owned by one of the major supermarkets. The management of Abacus have tried a series of promotions to boost sales and have introduced new products to attract new customers. In addition, they have closed several of the smaller stores which were suffering from the increased competition. Chris Smith has been the audit partner for Abacus for three years and has noticed that the monthly reports for Abacus are being produced later each year and the CEO and CFO at Abacus are just qualifying for their annual bonuses.

Required
What concerns would Chris Smith have about Abacus’ closing procedures when preparing for this year’s audit? Explain.