Chapter 3. Conclusions and recommendations resulting from the audit of intangible assets of the jsc "Bayan Sulu"

3.1 Results of check intangible assets accounting

Within the available opportunities for practical illustration of our audit implemented analytical procedures for the studied company. In international auditing standards the following definition of analytical procedures.

Analytical procedures - Evaluation of financial information conducted by examining the relationship between financial and nonfinancial information. Analytical procedures also include the study of the revealed changes and relationships that are inconsistent other relevant information or deviate from predicted amounts.

Analytical procedures used for the following purposes:

(a) as risk assessment procedures to obtain knowledge of the entity and its environment.

(b) as substantive procedures when their use may be more effective or efficient than conducting detailed tests to reduce the risk of material misstatement to an acceptably low level.

(c) as a general survey check on the latest financial statements, the review stage of the audit.

Auditors are following milestones of analytical procedures:

• defining the purpose of the procedure, which is subordinated to the objectives of the audit;

• choice of the type of procedure;

• direct execution procedures, which reduces to the calculation of the relevant coefficients, variances, trends;

• analysis of the results of the procedure.

The purpose of analytical procedures in auditing financial statements of "Bayan Sulu is the assessment of liquidity and profitability (in general financial condition of the Company) as at a particular date check, and for the past periods.

Kind of procedure is analytical procedures as substantive procedures. Analytical procedures are usually substantially more acceptable in relation to the large volume of transactions that can be predicted.

When performing factors will be considered: property; mobility assets; ratio of mobile and immobilized funds; the real value of assets; independence; dependence; financing; investment; the ratio of debt and equity; profitability ratios.

Calculate these coefficients for three years, using a form of financial statements as the balance sheet.

 

Table 3.1.

Calculation of coefficients characterizing the financial condition of JSC "Bayan Sulu"

Name of coefficient	The formula for calculating	Norm of coefficient	Calculation
			2010			2011			2012
			Beginof period	End of period	Begin of period		End of period	Beginning of period		End of period
1. Coefficient property	Fixed assets + inventories (materials) + WIP / assets (balance sheet)	> 0,5	0,84	0,57	0,57		0,71	0,65		0,47
2. Coefficient mobility assets	Current assets / balance sheet	Не < 0,5	0,77	0,80	0,80		0,49	0,49		0,46
3. Coefficient ratio mobile and immobilized funds	Current assets / Non-current assets	Не < 0,5	3,41	4,11	4,11		0,97	0,97		0,87
4. Coefficient real value of fixed assets	Fixed assets at depreciated cost / value of assets (balance sheet)	Не < 0,5	0,22	0,19	0,19		0,5	0,5		0,19
5. Coefficient independence	Equity / Balance sheet total	>0,5	0,75	0,38	0,38		0,21	0,19		0,15
6. Coefficient depending	Balance sheet total / Equity	1-2	1,33	2,63	2,63		4,76	5,02		6,67
7. Coefficient funding	Equity / Attracted (borrowed) capital (liabilities)	>1	3,07	0,61	0,61		0,27	0,25		0,18
8. Coefficient investment of	Equity / Fixed capital	>0,5	3,32	1,95	1,95		0,42	0,39		0,29
9. Coefficient ratio of debt and own funds	Borrowed capital / equity	1	0,33	1,63	1,63		3,73	4,02		5,46

Coefficient property characterizes the productive capacity of the enterprise. Coefficient values ​​of the property during 2010 and early 2012 fit in the recommended values​​, indicating that a high production capacity of the enterprise. At the end of 2012, this ratio is somewhat different from the standard value, which indicates a slight decrease in the capacity of the enterprise. It should be borrowing to replenish the assets of the enterprise.

Factor mobility assets of the company describes the proportion of funds for repayment of debt or share of the current assets in the total assets of the company. This ratio is fully fit within the recommended values ​​for 2010 - early 2011. In this interval of time, the company has sufficient funds to repay the debt. During the late 2011 - 2012 there was a slight deviation from the norm of this indicator, which shows a decrease in capacity of the enterprise to pay off creditors.

The ratio of mobile and immobilized funds shows the ratio between current and non-current assets. Calculations of this ratio indicate that during 2010 - 2012 years of its actual values ​​fall within the framework recommended. During 2010 - beginning of 2011 most of the funds advanced in current (mobile) assets.

Coefficient of the real value of fixed assets characterizes logistical base of the enterprise. Calculations show that the value of this ratio in 2010 - at the beginning of 2011 did not meet the recommended values​​, which suggests a weak material - technical basis of the enterprise. In late 2011 - early 2012 coefficient values ​​were normal, therefore, the company has improved its material and technical base. In late 2012, the rate of accepted value, much less standard (paragraph 0.31), indicating a weakening of the material - technical base.

Financial independence (autonomy) characterizes the enterprise's dependence on borrowed funds. Observed decline in the independence of the company in comparison with the beginning of 2010, an increase of financial dependence, the possibility of financial distress in the future periods. The financial independence shows that the business is totally dependent on borrowed funds, ie he has financial difficulties. calculation other coefficients confirms this condition. Enterprise underutilized potential to increase sources of funding.

Dependency ratio. Calculations show that this ratio satisfies the normative value only at the beginning of 2010. Throughout the late 2010 - 2012, the coefficient of dependence does not fit into the normative values​​, which confirms the lack of equity in the company.

The coefficient of financing only in the beginning of 2010 was much higher than normal (3.07 times) that spoke about the adequacy of their own sources of funds for the studied company, in a subsequent period there has been a sharp decline in this indicator, which indicates the prevalence of borrowed sources in the enterprise. Most of the assets of the company is financed by borrowed funds.

Coefficient of investment shows the use of equity capital for the acquisition of fixed assets and other long-term assets. Calculations of this ratio shows that during 2010 - early 2012, the company effectively use its own capital for purchase of fixed assets and other long-term enterprise. However, there was a tendency to reduce this figure. At the end of 2011 - 2012, the figure on the investigated company did not fit into the framework of the standard value. This suggests lack of effective use of equity capital for the acquisition of long-lived assets.

The ratio of debt to equity shows how much of the assets of the enterprise formed by borrowing (capital raised) or liabilities, borrowed funds attracted one tenge invested in equity assets. Calculations of this ratio shows that only at the beginning of 2010, this figure was normal. Throughout the late 2010 - 2012 year high coefficient did not fit into the framework of regulations, there was a tendency to decrease this coefficient. In 2012, the figure exceeded its standard value 5.46 time. This indicates a growing financial dependence investigated enterprise.

Table 3.2.

Calculation profitability ratios JSC "Bayan Sulu"

Coefficient	2010	2011	2012
1) Return on sales	1,24	1,18	1,15
2) Return on fixed assets	5,18	0,54	1,08
3) Return on current assets	1,09	1,94	1,64
4) Return on equity	2,03	2,00	2,00

Calculations on profitability ratios shown in dynamics indicate that the negative trend.

The downward trend of return on fixed assets indicates that the company effectively uses the basic tools. The same can be said about the working capital of the enterprise. The reason for these results was the decrease in the proportion of current assets to total assets, which is seen as negative. Also decrease the profitability of current assets was due to the increase of the absolute value of inventories (increase in the share of finished goods in inventory), which shows the decrease in segment sales.

Negative trend of return on equity indicates inefficient use of capital invested by the owners of the business.

In the analysis of return on equity showed a trend increase in retained earnings, which could be directed at improving the efficiency of production and increase the profitability of the enterprise.

Due to the impact of the global economic crisis, as well as the negative processes that preceded it, the company's activity, it was necessary to change the policy of working capital management, adequate changing economic conditions.

Reduced profitability ratios impact on financial stability.

Enterprise does not have enough working capital to ensure the normal operation. The company feels the lack of long-term loans, in particular, this is reflected in terms of 2011 and 2012. Although the total amount of the main sources of stocks experiencing a positive trend, this is achieved at the expense of short-term loans. The main factor of financial instability is caused by a lack of enterprise of working capital.

The calculations show irrational disposal own funds.

Joint Stock Company "Bayan Sulu" not financially sustainable, with unsecured solvency and liquidity, as evidenced by its financial reporting.

One of the reasons is financially unstable state that the products of JSC "Bayan Sulu" occupies only 2% of the market of Kazakhstan, while most of the market occupied by the production of foreign manufacturers (Ukraine). This suggests that the products of JSC "Bayan Sulu" is not competitive, which in turn talks about her poor quality.

Another cause of this condition is a global financial crisis that jeopardizes bankruptcy many businesses.

So, when auditing the financial statements were conducted analytical procedures such as inspection procedures on the merits. Based on the calculated coefficients, it was concluded that the financial position of "Bayan Sulu" is unstable, with the ability to pay unsecured, are the causes of such a state.