RCV Auditing firm will conduct part III of the audit of Apollo Shoes and will focus on two areas of concern, those being Inventory and warehousing cycle and Cash cycle. Within the scope of our audit we will review such items as receiving of materials, storage, purchase orders, shipping of orders. We will also review the company’s cash cycle such as receiving payments, cash posting, bank reconciliations and verification. Inventory and Warehousing Cycle There are several steps in the inventory and warehousing cycle of Apollo Shoes that will be reviewed for accuracy and completeness of policies and procedures in place. The first area that will be reviewed will be test of controls within the inventory and warehousing cycle such as: Inventory
When conducting an audit, one must develop a concrete understanding of a business and the type of environment the business operates in. The auditor must examine all the elements that make up the business and that also must include an understanding of the company’s internal controls. Once the auditor has a genuine understanding of the business; the auditor will establish material information, and create a series of procedures for the audit. In the instance of Apollo Shoes, an audit was conducted on the financial reports, the sales and collection cycle, and the payroll and personnel cycle. The final step of an audit design program would be to audit Apollo Shoes’ inventory and warehousing cycle and the cash cycle.
These procedures will be similar to the ones utilized in the other cycles. First, the audit engagement team will understand the internal controls to formulate the audit objectives of occurrence, completeness, accuracy, and timing. Second, the team will design tests of controls and substantive tests of transactions to meet those objectives (Arens, Elder, & Beasley, 2014). The following question will address the objective of the audit with examinations of test of controls and substantive tests of transactions: Objective Questions Test of Controls Substantive Test of Transactions Is there proper authorization for the issues of new notes Review note agreements for board of directors and executive management signatures. Review cash receipts and disbursements for large changes or unusual amounts All notes are recorded?
This is when an auditor does an actual review of the processes and the security of these processes and makes “professional recommendations” on the implementation of systems, the security of the systems and software, and even recommendations on better implementation of the database management. SAS 70 is important for all processes, electronic and manual, that may be outsourced to third party companies or may be maintained by third party software. This report provides the company as well as the third parties with a report that provides information on the internal controls that are in place and their effectiveness within both businesses. This allows the organizations to determine whether or not they need to make changes to their processes to ensure the security of the data that is being shared between parties (Hunton, 2004, p. 217). Finally, SAS 94 addresses the need for the auditor, and its firm, to fully understand the programming and technology that is being used for any given company.
However, we, as in AOW offer a couple of other types of audits, which is an operational audit, and a compliance audit. An operational audit evaluates all of the operating procedures for efficiency, and can include more than just accounting. The evaluation can include the organizational structure, computer operations, production methods, marketing, and any other area. A compliance audit can be helpful for staying in compliance with the Department of Labor by examining wage rates with wage laws among other areas. The financial statement audit is the one I will be concentrating on by examining the financials to be sure Apollo Shoes in compliance with the required US accounting standards.
The storage location of the payroll information, and the office space of the employees Activity 2 Explain the standard process used by payroll management to ensure employee allowance claims are substantiated. All payroll transactions are to be approved and authorised by payroll management. This will ensure that members will not have the access to approve their own payroll and ensure the integrity of the payroll system. Activity 3 Read the two scenarios and recommend one of the internal control measures for each. Explain why the recommended measure might stop the issue from recurring.
Other attestation standards include specific guidance on other attestation services, again to ensure each CPA practices applicable accounting procedures. The final standard that leads as most important is the Code of Professional Conduct. The Code of Conduct dictates ethical conduct and asserts that all practicing CPAs will act ethically and follow all three former standards and rules. A Code of Conduct is necessary for detouring fraud and ensuring the utmost professional
However, an implicit assumption is that users need reasonable knowledge of business and financial accounting matters to understand the information contained in financial statements. This point is important. It means that financial statement pre- parers assume a level of competence
Merliss wants to be sure that all reporting for this transaction is proper and transparent. The company asks you to research disclosure requirements related to its capital structure. A .Identify the authoritative literature that addresses disclosure of information about capital structure. Statement of Financial Accounting Standards (SFAS) No. 129 This statement sets standards for disclosing information about an entity’s capital structure.
2. Recognize and apply legal principles in the areas covered by the course when evaluating a proposal, writing a contract and/or making a recommendation to a client. 3. Understand product liability issues and recotnize contractual and non-contractual liability in business transactions. 4.