Poly Distributors Ltd$.$

December $31,2019$

PLANNING MEMORANDUM

Analytic Review Procedures $($ARP$)$

Per the horizontal analysis on WP A$,$ the following unexpected or unusual changes occurred in

$2019$ accounts $($circle increase or decrease$)$:

$$

Account

Account

$$

Account

$\%($Increase$/$decrease$)$

$\%($Increase$/$decrease$)$

Recommendation: Therefore, potential misstatements could exist in three accounts:

$.$ Expanded$/$Reduced$/$Normal

$($circle choice$)$ tests of controls and if necessary more$/$less$/$normal $($circle choice$)$

substantive tests should be planned in these areas.

Risk Assessment

i$)$ Inherent Risk

Most of the client staff and management are well educated, trained, and experienced they

enjoy a fair compensation package and are well motivated. The only exception is the

accounting technician performing the Sales Journal function who has less than one year

experience.

Overall IR is

ii$)$ Control Risk $($Initial Lead Sheet AdC$)$

Internal Controls should be assessed based on:

$(1)$ Cash WP AdD$-1$

$(2)$ Revenue$/$Receivables WP AdC$-1$

$(3)$ Purchases$/$Payable WP AdC$-2$

Based on these initial descriptions CR appears Low$/$High $($circle choice$).$ Recommend that

tests of controls be performed$/$omitted $($circle choice$).$

iii$)$ Detection Risk

Should be set at a high$/$low $($circle choice$)$ level and more$/$less $($circle choice$)$ substantive

testing is done in the following areas

$($To be determined after Control Testing is performed.$)$