The final step of an audit design program would be to audit Apollo Shoes’ inventory and warehousing cycle and the cash cycle. The auditor must cultivate a strategy, in order to develop the necessary information for the audit. The audit plan must be designed so that risk will be reduced to an appropriate level for the inventory and warehousing cycle and cash cycle. The procedures of the audit must include the testing of internal controls, substantive tests
| | |Suppliers | | | |(KCS/Westbourne) |Inspections. Feedback. Compliance. Targets and business | | | |objectives met. Budget management.
Technical Devices Division is also a manufacturer however they specialize in “electrical, electronic and mechanical testing devices” and market their product to distributors as well as direct sales to high-volume customers. Soma Desai, Chief Financial Officer at Wareham SC Systems, Inc. conducted a review of all three divisions’ revenue recognition practices in preparation of reporting third quarter’s Security and Exchange Commission’s (SEC) Form Q-10 filing. The SEC recently implemented reporting guidelines for revenue recognition as indicated in SAB101. According to SAB101 revenue should be recognized “when earned and realized or realizable” and must meet the following criteria: “persuasive evidence of an order arrangement exists, delivery of the ordered good has occurred or service has been rendered, the seller’s price to the buyer is fixed or determinable, and collectability of the sale proceeds is reasonably assured” (Anthony, Hawkins, & Merchant, 2010, p. 137). Wareham SC Systems, Inc.’s revenue recognition policy states that revenue for products will be recognized upon shipment.
688). The perpetual inventory master files are tested by an examination of documents that support additions and reductions of inventory amounts in the master files. This is done by examining raw materials that are added and reduced for use in production, the growth in finished goods inventory when goods have been manufactured and the decrease when finished goods are sold (Arens, Elder, & Beasley, 2012). The accuracy of perpetual inventory master files are relatively easy to test once the auditor concludes the competence of the intention and enactment of inventory internal controls and the associated level of assessed control
Audit Program Apollo Shoes Audit December 2, 2013 A Sales and Collection Cycle Design test of controls -Examine Customer Files -Examine Customer Orders -Examine Sales Invoices, Bills of Lading, and Customer Orders for consistency -Examine sales and credit procedures manual -Examine customer orders for proof of customer approval -Examine sales invoices for supporting bill of lading and customer orders -Determine if monthly statements are sent to customers -Examine credit procedures -Examine tolerable misstatements in accounts receivables. Substantive Test of Transactions -Review customer files for completeness. -Review customer orders for customer approval and credit approval. -Review customer orders for timing of approval, shipments,
This letter serves to provide Mr. Lancaster with an overview of section 404 and other regulations that relate to the audit of internal controls as well as a synopsis of internal control risks that have and will be identified within Apollo Shoes Inc. This letter will also describe the responsibilities of our firm in regards to detecting and reporting fraud. In the SOX act, Section 404 suggests all publically traded organizations need to establish
This will satisfy the existence objective. They can also observe the employees and make inquiries of the inventory process when necessary. The audit team can record the client’s recording of transactions by verifying the amounts of transactions. SDF’s Best Boy Gourmet is sold by special order through their relatively new website. The auditor will want to test the computer program to the unit selling prices on the sales invoice with an electronic file of approved prices to test the accuracy objective for sales
Kudler’s intranet site states that Kudler’s management has been successful in monitoring the company’s activities through different finance and accounting financial modules. For examples, POS module is used to “capture and reports all retail sales in details” (POS procedures, Kudler intranet site), and all data have been transmitted directly to GL accounts, the Electronic Payment Clearing House, and the company purchasing control. This method means that not only electronic payment methods are accepted but also vendors, orders, and inventory are updated timely. Moreover, by collating data from GL, AP, AR and POS modules, central management and department managers are able to analyze each store real-time inventory and “forecast to extrapolate past data into future projections” (Supply chain Overview, Kudler intranet site). The software is capable of accounting for the impact of sales and accounting activities, also helps increase the company’s processing
A balance sheet is usually prepared at the end of an accounting period. Internally, a balance sheet helps a business check its liquidity position and the current health of the business. With the use of a balance sheet managers can check the liquidity of an organization. A balance sheet also helps in
Specifically we were to focus on improving the stores sales. Store sales were the number one priority. One has to also consider legal issues, employee pay, and inventory. In the simulation one was asked to evaluate the problem, isolate, analyze it and find a suitable solution. In the simulation one was supposed to separate critical issues from non-critical and then rate them based on