PwC IEUK

work sample
Project book - June 2023
How to use this book
Welcome to the PwC IEUK work sample
Over the next two days, you’ll be working through an audit for a fictional client, Sustedible.
There’s four tasks for you to complete as you work through the project. They’re entirely fictional,
but they’ll give you a flavour of the work we do in Audit.

We’ve suggested how long you might want to spend on each task as a guide, but you’ll need to
manage your own time, and work through the tasks sequentially. For each task, you’ll see some
instructions from your team, supporting documents and evidence from the client. You can also
conduct your own research to help you.

The project book includes editable sections so you can complete the worksheets in here without
having to print them off. To edit the document you’ll need to download the project
book and save it to your computer. Remember to keep pressing ‘save’ throughout the day
so you don’t lose your work.

PwC 2
 Task 1: PESTLE Analysis
Political
 Government regulations and
policies regarding food safety
and sustainability could impact
the operations and supply chain.
 Taxation policies and
import/export regulations might
affect the cost of ingredients and
shipping.
 Political stability and potential
changes in government can
influence consumer confidence
and spending behavior.
PwC
Suggested time for this task: 1-1.5 hours
Economic Social
 Economic fluctuations can  Growing awareness and interest
impact consumer spending on in sustainable and organic food
luxury or premium food can be a positive factor for the
products. business.
 Inflation rates can affect the cost  The popularity of comfort food
of ingredients and production and home-cooked meals may
expenses. align with the offerings.
 Exchange rates may impact the  The influence of social media
cost of imported ingredients or and influencers can greatly
packaging materials. impact the brand visibility and
 Unemployment rates and sales.
income levels can affect the  Dietary preferences and food
demand for the premium food trends may influence the menu
products. choices.
3
 Task 1: PESTLE Analysis
Technological
 Issues with the e-commerce
platform can lead to customer
dissatisfaction and decreased
sales.
 Technological advancements
may allow for more efficient and
sustainable farming and
production methods.
 Online marketing and social
media can be powerful tools to
reach a wider audience and
engage with customers.
PwC
Legal
 Compliance with food safety and
labeling regulations is essential
for the business.
 Intellectual property rights, such
as trademarks for your brand
name and logo, need to be
protected.
 Labor laws and regulations
regarding employment may
affect the workforce.
Environmental
 The focus on sustainability
aligns with the increasing
demand for eco-friendly
businesses.
 Climate change and extreme
weather events can impact the
farm's productivity and supply
chain.
 Sustainable packaging choices
and reducing plastic waste can
positively impact the brand
image.
4
 Task 1: Notes

Use this space to record any notes

Overall, the food delivery business seems to be in line with many current trends and consumer
preferences, especially with a focus on sustainability, organic food, and working with local
suppliers.

However, addressing the issues with your e-commerce platform is crucial for ensuring a smooth
customer experience and successful online sales. Additionally, staying up-to-date with changing
regulations and market trends will help you maintain a competitive edge in the industry.

PwC 5
 Task 2: Sustedible Suggested time for this task: 30 minutes
Balance Sheet
In-Scope? In-Scope?
Balance Sheet (tick)Profit and
2022 Loss2021 £000s
£000s (tick) 2022 £000s 2021 £000s

ASSETS
Fixed Revenue Cost  5,000 4,000
Property, Plant and Equipment  1,500 500
of Sales (170) (136)
Current 4,830 3,864
Gross Profit
Cash 20 10
Accounts Receivable 20 15
Inventory  400 300 Admin (200) (150)
Total Assets 1,940 825 (250) (250)
Distribution
LIABILITIES 4,380 3,464
Profit from
Long Term operations
Borrowings  (200) (300) (500) 0

Current 3,880 3,464
Exceptional Items
Accounts payable  (50) (60)
Tax  (10) (50) Profit before Tax
Other (10) (20) (780) (693)
Total Liabilities (270) (430) Tax 3,100 2,771
NET ASSETS 1,670 395
Profit after Tax
1,275 2,771
EQUITY
Share capital 20 20 Profit for the year
Retained Earnings  1,650 375
Total Equity 1,670 395
Materiality should be set at:

Why?
PwC 6
 Task 2: Notes

Use this space to record any notes

PwC 7
 Task 3a: Stock count Suggested time for this task:15 - 30 minutes

Count the number of units held for each item and multiply it by the value per unit. This give us the total value of stock
per item. Sustedible have completed their own stock count. As their auditors, we need to verify this.
Total value Number
Stock item Value per Total value
Stock description Units held held as per verified via Misstatement?
number unit stock held
stock listing stock count
Chicken Tikka 11 66 6
001 -1000 10 £6 £60
Masala
001 -1001 Lamb Ragu 7 £6 £42 7 42 0

Creamy Chicken 7 42 (6)

001 -1002 8 £6 £48
Tarragon
Aubergine 4 42 6
001 -1003
Lasagne 6 £6 £36

001 -1004 Lentil Chilli 8 £6 £48 8 48 0

001 -1008 Proper Mash 10 £3 £30 8 24 (6)

5 15 (3)
001 -1011 Mixed Salad 6 £3 £18
279
TOTAL £282

PwC 8
Task 3b: Inventory
Suggested time for this task: 30 mins

Item Quantity Historical Value Total Historical Value Total NRV

Mains Chicken Tikka Masala 75 £1.50 112.5 187.5

Lamb Ragu 34 £2.10 71.4 85 Net Realisable Value

61.18 115 Mains : 6 - (2 + 1.5) =
Creamy Chicken Tarragon 46 £1.33
2.5
Aubergine Lasagne 14 £0.98 13.72 35

Lentil Chilli 24 £1.05 25.2 60 Sides: 3 - (2 + 0.5) =

Prawn Red Curry 35 £2.75 96.25 87.5 0.5

Traditional Fish Pie 35 £2.45 85.75 87.5

Sides Proper Mash 75 £0.86 64.5 37.5

77.6 40 Marketing costs (inc

Triple Cooked Chips 80 £0.97
social media)
Fresh Greens 56 £0.84 47.04 28 £2 per item
Modification costs
Glazed Carrots 45 £0.82 36.9 22.5 (e.g. cooking,
50.56 32 preparing, packaging)
Mixed Salad 64 £0.79
£1.50 per main
Total Inventory value: 742.6 817.5 £0.50 per side
PwC
 Task 3: Audit
procedures (b, c & d)
How much should the total
inventory be valued at in
the financial statements?
Have the sales been recorded accurately? AreWhat
No, Dispatch number 10048,
10049, 10173, 10174 are not
correctly calculated
PwC
Suggested time for this task: 1-1.5 hours
742.6 Is Sustedible’s NO
valuation correct?
thererisks
any discrepancies? What
might we encounter as auditors? Did youisencounter
our role asany?
auditors in dealing with those risks?
1. Revenue Recognition Risk:
There may be instances where sales are recorded Risk Assessment:
prematurely or inappropriately, leading to incorrect
Audit Planning:
revenue recognition. Substantive Testing:
2. Inventory Valuation Risk: Analytical Procedures:
Inconsistent or incorrect inventory valuation methods, Internal Control Evaluation:
such as the use of historical cost or market value, can Fraud Detection:
impact the accuracy of the total inventory value. Data Verification:
Errors or inaccuracies in physical inventory counts can
lead to misstatements in the total inventory value.
3. Data Accuracy and Integrity Risk:
Mistakes during data entry can result in inaccurate sales
and inventory records.
4 Fraud Risk:
The risk of intentional misstatements in sales data to
inflate revenue.
10
 Task 3: Notes

Use this space to record any notes

PwC 11
 Task 4: Closing the audit Suggested time for this task: 1-1.5 hours

Clearance agenda Auditor’s opinion

Inventory Count Discrepancies:
need to Discuss the inconsistencies in the inventory count and how it impacts the accuracy of the inventory valuation.
need clarification on the reasons for the incorrect inventory count and whether there were any specific challenges
during the count process. Draft Summary of Auditor's Viewpoint:
need to Discuss potential solutions to improve the accuracy of future inventory counts, such as implementing regular
cycle counts and improving inventory tracking systems. Based on the findings during the audit, it is evident that there are significant
Sales Recording Errors: issues with the client's inventory counting process and sales recording, leading
need to Address the issue of wrong sales being recorded, leading to incorrect revenue recognition.
to material misstatements in the financial statements. The inaccuracies in
Inquire about the root causes of these errors and whether there are any underlying issues in the sales recording process.
need to Discuss ways to enhance controls and procedures to prevent such errors in the future, such as implementing inventory valuation and revenue recognition call into question the reliability
dual authorization for sales transactions and conducting regular reconciliations. and accuracy of the financial statements. It is essential for the client to address
Software Reliability: these issues promptly and implement robust internal controls and policies to
need to Evaluate the effectiveness of the current software used for inventory valuation and sales recording. prevent such errors in the future. By tightening up their controls and
need to Discuss potential software upgrades or alternative solutions that can provide more accurate and reliable implementing better tracking systems, the client can ensure a more accurate
calculations. representation of their business's performance in their financial statements. As
Consider the need for additional training for staff using the software to ensure proper utilization and data entry. auditors, we will need to work closely with the client to resolve these issues
Internal Controls and Policies: and obtain sufficient, accurate evidence before finalizing the audit report.
need to Discuss the effectiveness of the client's current internal controls related to inventory management and sales
recording.
need to Emphasize the importance of strong internal controls to mitigate the risks of errors, fraud, and inaccuracies.
Materiality and Financial Reporting:
need to Address the impact of the identified errors on the overall financial statements.
need to Discuss whether the errors are material to the financial statements and if they require restatement or disclosure
in the notes to the financials.

PwC 12
 Task 4: Notes

Use this space to record any notes

PwC 13