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Essay Available:
Pages:
4 pages/β‰ˆ1100 words
Sources:
2 Sources
Style:
Other
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 18.72
Topic:

Planning an Audit and Designing an Effective Audit Program

Essay Instructions:

Overview
It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS).
Use the Internet to select a public company that appeals to you. You may also use the company dossier in the Nexis Uni database to find company information.
Imagine you are a senior partner in a public accounting firm hired to complete an audit for the chosen public company.
Instructions
Write a 4–6 page paper in which you:
1. Outline the critical steps inherent in planning an audit and designing an effective audit program. Based on the type of company selected, provide specific details of the actions the company should undertake during the planning and designing of the audit program.
2. Examine at least two performance ratios that you would use in order to determine which analytical tests to perform. Identify the accounts that you would test, and select at least three analytical procedures that you would use in your audit.
3. Analyze the balance sheet and income statement of the company that you have selected, and outline your method for evidence collection, which should include, but not be limited to, the type of evidence to collect and the manner in which you would determine the sufficiency of the evidence.
4. Discuss the audit risk model and ascertain which sampling or non-sampling techniques you would use in order to establish your preliminary judgment about materiality. Justify your response.
5. Assuming that the end result is an unqualified audit report, outline the primary responsibilities of the audit firm after it issues the report in question.
6. Use the Strayer Library to locate at least two quality academic resources in this assignment. Note: Wikipedia and other similar websites do not qualify as academic resources.

Essay Sample Content Preview:

Company Audit
Student's Name
Institution Affiliation
Instructors Name
Date
Planning an Audit and Designing an Effective Audit Program
An audit process is a comprehensive review of a company's financial statements, internal controls, and compliance with regulations. Planning is critical in ensuring a successful audit and involves various steps. They include understanding the company's operations, business, and industry, establishing financial reporting areas that may be vulnerable to material misstatement, determining the likelihood of material misrepresentation, designing a risk-based implementation plan, selecting the appropriate audit procedures, and documenting the audit plan (Cooper et al., 2013). Amazon Inc. is the company chosen for this paper. Each audit process varies depending on the client, but in the case of Amazon.com, Inc., the following steps, as listed below, can be employed to conduct a successful and effective audit.
The first step is the planning and design phase, which entails a thorough analysis of Amazon's industry, identifying potential operational risks, developing a baseline analysis technique, applying materiality requirements, internal control systems, and the risk of fraud. The corporation Amazon Inc has extensive transactions that must be divided into smaller steps. The fraud risks also increase with the firm's scale and individuals engaged. Still, considering the company's image, it is safe to estimate that the internal control systems are at a high level. However, further research will be done because they are merely hunches.
Controls and transactional assessments, including various testing of control systems and transactions for Amazon Inc. are carried out in the second step. These evaluations will be based on the organization's internal control level, which could rise or fall. The possibility of financial information misrepresentations will also be evaluated during this phase.
The third stage involves conducting analytical processes and balance detailing. The major components, including balance figures for cash, invoices and inventory, would be tested, and various analytical methods would be carried out. The correctness and completeness of the financial statements must be understood during this stage.
The final step is completing the Audit and issuing an official report. Any additional assessments would also be conducted during this stage, as a review process and memorandums are submitted to the management teams. The audit report would express an opinion on the financial reporting fairness and identify any issues related to an internal control system or failure to comply with regulatory requirements.
Performance Ratios Applicable
Gross Margin Ratio: This is a key profitability ratio used to determine how much a business makes in profits upon every revenue dollar after subtracting the price of products purchased (Seissian, 2018). A high gross margin ratio means an organization can profit more from each sale, which is good for investors. On the other hand, a low gross margin ratio may indicate that a company's cost of goods sold is too high, which may hurt its profitability.
Return on Assets (ROA) Ratio: The ROA calculates h...
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