Audit Program Design Part II Aquilla Carroll-Pendleton Alison Marlo Darrell Morris Cliff Parchmon ACC/546 November 4, 2013 Chandria Willis Audit Program Design Part II A part of designing Apollo Shoes' audit program includes testing controls for the company's various cycles. At this point in the audit planning, tests of controls, tests of transactions, and analytical procedures are designed for the following cycles: sales and collections, payroll and personnel, and acquisition and payment. Sales & Collection Cycle Tests of Controls Tests of Transactions Analytical Procedures Payroll & Personnel Cycle Tests of Controls Tests of Transactions Analytical Procedures Acquisition & Payment Cycle The auditing and acquisition cycle of the audit process for Apollo Shoes, Inc. will include test of controls, substantive tests of transactions, and analytical procedures. "The acquisition and payment cycle involves the decisions and processes necessary for obtaining the goods and services for operating a business" (Arens, Elder, & Beasley, 2012). The accounts are assessed base in accordance with the generally accepted accounting principles (GAAP) to ensure they are represented fairly.
You would need to include all employees who handle cash on the application. They would go through screening by the insurance company and be held legally responsible for any misuse of funds found. You should establish vacation requirements and rotation of duties. You could have a part-time accountant be required to fill for both the accountant and the treasurer whenever they are out on some required vacation. LBJ Company is handling the physical control of payroll checks accurately as all checks are being safely secured in
Sales and Collection Cycle The sales and collection cycle will entail researching of Apollo Shoes journal of sales in search of abnormal transactions and records. The process of this audit test procedures begins when a customer purchases a product from Apollo, and ends with the receipt of the complete payment from the customer. The test of controls the auditors will perform comprises the completeness, accuracy, and classification of transactions and will include accounting for a sequence of shipping documents, observing whether monthly statements are sent, and examining document packaging for internal verification. It will also test of controls for a sequence of shipping documents and the substantive tests will be to compare the date of recording the sale in the sales journal with duplicate sales invoices and bills of lading. Finally, the test of controls for the posting and summarization objective will be to examine evidence that the accounts receivable master file is reconciled to the general ledger and observe whether monthly statements are sent to customers.
Audit Program Design Part III Senyo Adiko ACC/546 June 9, 2013 Chandria Jones Audit Program Design Part III During phase III of Apollo shoes audit plan, we will focus on the inventory and warehouse cycle as well as the cash cycle. Cash and inventory are vulnerable to fraudulent activities so it is important to assess the risks of those areas. We are responsible to conduct an unbiased and fair audit according to the PCAOB auditing standards. Our center of interest would be about the objectives of the audit, tests of controls, and substantive tests of transactions. We will also conduct analytical procedures for both cash, and inventory and warehouse cycles.
GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements. Companies are expected to follow GAAP rules when reporting their financial data via financial statements. If a financial statement is not prepared using GAAP principles, be very wary! Therefore, you still need to be careful and review other financial reports which can be altered. Convergence means that the U.S. Financial Accounting Standards Board (FASB) and the Independent Accounting Standard-setting Body (IASB) would continue working together to develop high quality, compatible accounting standards over time.
ANSWER After analysing the duties that the Dewy, Cheatem and Howe Law Firm have outlined for the post of an Office Junior / Administrative Assistant, I have come up with the following transferable skills, which I believe I could take from the outlined responsibilities: A. Ensure that all the office stationery, printer supplies are well stocked. In carrying out this responsibility, I should acquire the ability to: * Count, compile and observe supplies to ensure constant availability. * Take inventory of all the supplies coming in and being used. * Be financially accountable, by keeping financial records.
The existence assertion is to make sure that the client and accounts exist, the completeness is to make sure that all of the balances are recorded, and the valuation is to make sure that the balances are recorded at the correct amount. It is important that the auditor obtains a confirmation from a third party for the information in accounts receivables. After communicating and obtaining the information, the auditor is to evaluate the information (SAS No. 67, AU Section 330.11). The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level.
There are four types of transactions involved in the inventory and warehousing cycle of Apollo Shoes, Inc., ordering of goods for sale, receipt of the ordered goods, storage of the merchandise, and the shipping of goods to customers. Each of these processes requires that the auditor verify that adequate controls are maintained and that the proper documents are in place for each portion of the process. Therefore, the audit will involve analytical procedures, test of controls and substantive tests on each part of the cycle. Analytical procedure Given the fact that the inventory process will vary between companies, Anderson Olds and Watershed will obtain a thorough understanding of the entire flow of goods from purchase to shipment within the Apollo Shoes organization. Analytical procedures “examine the relationship of inventory account balances with other financial statement accounts” [ (Arens, Elder, & Beasley, 2006, p. 689) ] and are used to “assess the reasonableness of inventory-related balances” [ (Arens, Elder, & Beasley, 2006, p. 689) ].
Accrual Basis versus Cash Basis Accounting Summary Any good accountant knows that every business has different financial reporting needs. In order to better understand how to accurately record financial transactions for all kinds of businesses, it is important to know the two principle types of accounting. The first is accrual basis accounting, and the second is cash basis accounting. These two methods of accounting are based on two opposing ideas on when and how transactions are recorded, and each also possesses its own advantages and disadvantages. In the accrual basis method, transactions are always recorded immediately.
Trace transactions recorded in the acquisitions journal to supporting documentation, comparing the vendor’s name, total dollar amounts, and authorization for acquisition. This is primarily a test of controls. The purpose is to ascertain if the documentation supporting acquisition transactions are properly recorded. This makes sure that acquisition journal has authorization for purchase, the vendor's name, and the total dollar amounts. So the acquisition entries are supported by adequate information.