Audit Proposal
By: Catherine Chase
Instructor: Khatrina Higgs, CPA
ACC/542
Audit Proposal
Abstract
Understanding the audit process and how auditors operate is vital since it informs IT managers how to develop an environment that is compliant. More importantly, this brief will discuss the role of the auditor and its responsibilities as well as expand on the role and responsibilities of management during and after the audit. This brief will also focus on the methodologies of how auditors conduct the IT audit process and the specifics that are involved in performing an audit as well as the responsibilities of management.
Financial Audit vs. IT Audit
The primary objective of a financial statement audit is to ensure that
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Additionally, AICPA issued SAS No. 90, which requires Auditors conduct open and frank discussions with management and the audit committee relating to the quality and the acceptability of the organization 's accounting principles as it pertains to its financial statements. These discussion should generally also include matters relating to the consistency and application of the accounting policies as well as the clarity and completeness of the financial statements (Reinstein & Houston, n.d.).
The new rules by the SEC 's require audit committees to include a report in the company 's proxy statement that informs shareholders of the committee 's financial oversight responsibilities.
Auditing Around The Computer
The auditing around the computer approach is pragmatic when computer applications are simplex. Moreover, SAS No. 94 doesn’t eliminate the use of this technique, rather, this approach may be well suited for firms using a variety of accounting software that process applications periodically, or where the audit trail generated is extensive and allows outputs to be referenced back to inputs. However, one of the primary weaknesses of auditing around the computer is that it is unable to determine whether the program logic is correct, nor does this approach reveal how the automated controls respond to a wide variety of transactions that contain errors. Therefore, in a complex IT environment, this approach may potentially overlook significant errors rendering it
The following provides high-level information about auditing a fictional entity, called Sofitec Computers, created for this case study. This case does not include a complete description of the entity or the industry, nor does it provide comprehensive information on auditing; it is only intended to provide the information that will be necessary and helpful in completing this case study and answering discussion questions.
The aim of this report is to develop an audit plan using the 2007/2008 annual reports of the WesFarmers. This report will provide an understanding of the underlying concepts of an overall audit strategy. This strategy will bring forward the direction and scope of the WesfFarmers audit plan. This report will address five major points these are as follows:
Due to increasing economic and financial growth, many types of audit have been incorporated throughout the development process of internal activities. Audits can be performed manually or they can incorporate technology. According to Hunton and
The Sarbanes-Oxley Act of 2002 significantly increased the authority of audit committees in overseeing their companies’ financial reporting processes. One of the audit committee’s responsibilities is that they oversee the financial reporting process. Audit committees are required to review and discuss the annual audited financial statements with management and the external auditors. They also monitor control processes. Monitoring internal controls directly affects the reliability of financial statements is generally understood to be a function of audit committees. SOX section 301 directed the SEC to require audit committees to establish procedures to handle complaints on accounting, internal accounting controls, or auditing matters and to provide confidentiality to employees who submit complaints. Section 301 also states that audit committees are solely responsible for all the aspects relating to selecting, hiring, and replacing external auditors, whom report to the audit committee. An audit committee approves the compensation to external auditors. It also states that audit committees must discuss and resolve disagreements between management and external auditors.
The Audit Process Proposal begins with an introduction to IT audit controls, operations and asset management, policy and procedures, and the necessity and purpose of each of these areas. Detailing the means through which the objectives of an audit focus on the assessment and evaluation of technological features in any given enterprise. Included in this section is the audit process
Regulatory Authorities: The financial statement help accounting authorities to ensure that the company's disclosure of accounting information is in accord with the rules and regulations set in order to protect the interests of the stakeholders who rely on such information in forming their decisions.
Section 204 states that each registrated accounting firm must report to the audit committee all “critical accountingpolicies and practices to be used; all alternative treatments of financial information within [GAAP] that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred”. This stipulation conducive to audit committee to monitor external auditors.
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.
This assessment required students to take the role of an audit manager that is currently employed with Deep Breath LCC, a medium sized national accounting firm. This particular firm offers auditing services as well as tax services. The main purpose of my role as the audit manager is to decide and justify reasons on a new audit client acceptance. The process of accepting a new client is not a simple procedure especially during this phase where the public accounting environment is changing drastically. Intense competitive pressures among audit firms in selecting the best clients and increased exposures of litigation have driven auditors to be more prudent in the process of making decisions when accepting a new audit
To enable users to understand the language of audit reports, AICPA professional standards provide uniform wording for the auditor’s report, as illustrated in the auditor’s standard unqualified audit report in Figure 3-1. Different auditors may alter the wording or presentation slightly, but the meaning will be the same.
McCrimmon Parkway Temporary Road Closure: Staff have not received any new information on when work may begin. Information will be shared with Council and residents when it becomes available.
An external auditor reviews a company’s financial reporting processes to attest that the financial statements fairly and accurately represent operational results and conform to generally accepted accounting principles. The audit process provides a reasonable, verifiable basis for the auditors’ opinion regarding the financial statements. An audit plan describes the various procedures that will be used and the purpose of those procedures. While management is responsible for presenting the financial statements, the auditor is responsible for attesting to the measure of risk observed in relation to any possible material misstatement in the financial statements provided. The following is an audit plan for Keystone Computers & Networks, Inc.
The Key control activities are proper segregation of duties, authorization, documentation and recording, preparation of monthly statements and internal verification procedures.
After completing this week’s Learning Activities, use what you have learned to complete this project. Create a word processing document that demonstrates completion of the following tasks. Include the tasks and question numbers in your document. APA Style is not required. If you have questions about the assignment, see the FAQ under General Course Content or post your questions in General Course Questions under Getting Started. When complete, submit your assignment here:
When it comes to information systems, auditing has never been so crucial regardless of the industry. As the digital realm is intensifying and information systems are evolving, we can see an increase in security breaches, which causes financial and long lasting reputational damage to an organization.