Auditing-Accsys Technologies Plc - Case Study Example

It is exposed to overestimation of financial figures as in the current fiscal it has adopted IFRS for the group has a whole and follows UK, GAAP for its parent company. Unlike in GAAP, under IFRS it requires companies to value financial items at fair market value. If the market value of the asset is more than its written down value, it will lead to overestimation that increases the inherent risk (Carcello & Nagy, 2004). Accsys Technologies Plc has revised its accounting reporting standards from GAAP to IFRS for its group as a whole and not for the parent or subsidiary companies.

It adopted IFRS 13 and IAS 1 for the current period. IFRS 13 fair value measurement implies that the value of the financial and non financial items will be recorded in the books at market price which includes inventory, assets, investments, etc. The change in reporting standard might exhibit highly geared assets i.e. assets might have a relative low price in the domestic market compared to the value of its final product. Accsys Plc reported a 78% increase in its revenue and the EBITDA margin for its Arnhem plant was €2.

4 million compared to a loss of €.9 million in the last fiscal. The resulting difference in the operating income and loss is a key indicator of its reporting mechanism than its increased demand in the global market (Accesys Technologies, 2015). In the current fiscal Accsys discontinued its licensing partnership with Diamond Wood China Ltd and as per the order of the tribunal was supposed to pay £1.6 million. It also incurred legal costs of £.6 million. Such transactions did not feature in its annual report of 2014 and thus clearly indicates the risk of misstatement i.e. arising out of error or intentional actions (Khurana & Raman, 2008).

Accsys Plc is in the practice of recognising all cost of revenue to the Arnhem manufacturing plant if it cannot be recognised with the licensee.