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?
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
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
As a member there are certain criteria and professional standards that we must uphold. CPAs have auditing and assurance standards that must be followed to ensure valid and accurate information from company to company. Pronouncements are often issued to keep all CPAs informed on industry changes. Compilation and review standards provide the same value as auditing standards, to ensure services are provided in a similar fashion by all CPAs. Other attestation standards include specific guidance on other attestation services, again to ensure each CPA practices applicable accounting procedures.
At the time of recording the information all clarifications can be made for accuracy.The records should be signed, dated and legible for other users to access easily. 2.2 Describe practices that ensure security when storing and accessing information. The practices that ensure security when storing and accessing
Robbin Industries is jeopardizing itself by not properly reporting the advertising costs. As an operating company, they must understand the generally accepted accounting principles and adhere to them (Weygandt, Kieso, & Kimmel, 2010). (c) What would you do if you were Wayne Terrago? Wayne Terrago should try to report the financial condition and results of operations fairly and in accordance with the generally accepted accounting principles. As controller, Wayne should inform management and understand what is acceptable according to the GAAP.
Documentation of Procedures - making sure that the expense reports are accurate and that original receipts are used for proof. 4. Physical Controls - in order to safeguard property against theft and vandalism. Based on those principles, I see several areas of potential improvement. Let's consider the scenarios you have provided: First, it is very important and absolutely crucial that you have faith in long term employees.
Perform tests of controls and substantive tests of transactions. Before the audit team can safely reduce planned assessed control risk, they need to test the effectiveness of the controls (Arens, Elder, & Beasley, 2012). One control that can be tested for SDF is the inventory, all inventories, but specifically returned inventory. The best way to test this control would be to physically count the inventory and compare it to what the invoices say there should be. This will satisfy the existence objective.
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
Each measure is taken to maintain accuracy and reliability in daily operations. Internal controls help to protect the company’s resources against theft, fraud, and errors. Internal control is like checks and balance systems to verify everything is in order. There are different levels or components of internal control. There are controls that prevent mistakes or errors from occurring.