Audit Checklist

Describe how you would conduct the audit process, incorporating the analytical procedures you would use to investigate selected business transactions?

This research paper is being submitted on March 10, 2013, for Tiffany Krogman, A340/ACG3085 Section 03, Advanced Auditing Concepts & Standards.

The GASB Statement No. 56 was initiated on April 16, 2009. The essence of the new ruling aims to integrate the accounting and financial guidelines of the American Institute of Certified Public Accountants (AICPA) with the GASB’s accounting procedures that concern the state and local government (“New Release,” 2009; “Statement No. 56,” 2009; “Summary of Statement No. 56,” n.d). The statement does not create new financial reporting guidelines or requirements nor imply amendments to the current policies. Rather, it “relocates the existing” guidelines from the “professional auditing standards (“Statement No. 56,” 2009, p. 11). There are three major areas that are taken into consideration, namely “related party transactions, “going concern” attributes

Carcello, Hollingsworth and Mastrolia tested whether PCAOB annual inspections result in higher quality financial reporting (Carcello, Mastrolia, & Hollingsworth, 2011). They compare abnormal accruals reported by audit clients before and after initial inspections by PCAOB (Carcello, Mastrolia, & Hollingsworth, 2011). If the inspections result in improved auditing, they expect to see less earnings management after the initial inspection (Carcello, Mastrolia, & Hollingsworth, 2011). For comparison purposes, they make the same observations before and after AICPA peer review inspections made prior to SOX (Carcello, Mastrolia, & Hollingsworth, 2011). They find a significant decrease in income-increasing abnormal accruals in the first and second years

According to Granof, “attestation engagements cover a broader scope of engagements than financial audits” (Granof, 2013). Attestation engagements examine, review, and/or preform agreed-upon procedures as to various types of subject matters or management assertions. The may include the following:

When analyzing the Pinnacle Manufacturing Financial Statements there multiple concerns that should be further investigated that I will explain in this memo. When identifying the year to year change and using financial ratios found on A6, there are a couple of concerns that need to be identified. The fact that the operating expense from fluctuated from an increase $892,861 from 2009 to 2010 and then decreased by $956,231 from 2010 to 2011 should be raised in question. At the same time Operating expenses income from operations decreased from 2009-2010 by $1,260,571 and increased from 2010-2011 by $78,541. The -23.10% from 2009-2010 is concerning in their ability realized from profit on their business operation. On the balance sheet there

SUBJECT: Beginning the Audit Report (Engagement letter, Engagement checklist, Outline of timeframes and milestones of the audit)

b. The evidence I have submitted for assessment has not been shared with other students, and I have taken all reasonable precautions to ensure that my work cannot be accessed by other students that may seek to submit my work as their own, and

The audit team met prior to conducting this audit, reviewed the audit checklist, revised several Melt Shop and Caster Work Instructions, and discussed the audit scope.

The purpose of Part 1 is to perform preliminary analytical procedures. You have been asked to focus your attention on two purposes of analytical procedures:

SUBJECT: Beginning the Audit Report (Engagement letter, Engagement checklist, Outline of timeframes and milestones of the audit)

As a firm, we have an uncompromising dedication to quality and excellence in everything we undertake. We participate in the American Institute of Certified Public Accountants (AICPA) Peer Review Program, which covers our audit and accounting practices. This program requires our Firm undergo an examination of our quality control policies and procedures every three years by an independent public accounting firm. Because of our dedication to quality, we have selected a premier peer review firm for this evaluation and have received “pass without deficiency” (the highest achievable rating) on each of our examinations including the review completed earlier this year. See Appendix A for a copy of the most recent Peer Review Letter.

• Directing appropriate attention to the different areas of the audit such as assessing materiality, so that when the detailed audit plan is prepared, audit procedures can be directed towards the material amounts.

This part of the audit case illustrates the manner in which the auditors design substantive tests of balances. The substantive tests are illustrated for two accounts—receivables and revenue. This aspect of the audit is illustrated with the following audit documentation: • ABC’s risk assessment working paper that combines the auditors’ assessments of inherent and control risks into an overall risk of material misstatement for the assertions. • The substantive audit program of accounts receivable and revenue. • The audit sampling plan for the confirmation of accounts receivable.

Using computer-based accounting systems does have its disadvantages, such as certain laws pertaining to confidentiality, the requirement to protect against the loss of data through power failures, the