Auditing Ford Motor Company Financial Reports

Auditing

Ford Motor Company continued to experience profitable growth in 2012 through the firm's proven One Ford plan regardless of experiencing the ongoing challenges that characterized the global market during this period. The company's efforts toward meeting the needs of its customers contributed to strong financial results for the fourth consecutive year as it registered positive net income. The strong financial results were documented in Ford Motor Company's annual report for 2012, which also provided a roadmap for its business operations in the coming years. However, auditors have come into a department as part of a company-wide audit before issuing an audit opinion for the firm's financial reports. The department's staffs need to have some expectations of what the auditors will do as part of their plan to issue an audit opinion of its financial reports.

Auditors play a crucial role in ensuring that what company outsiders see on financial reports is an accurate reflection of the firm's financial situation (Epstein, p.176). Auditors basically have the role of evaluating the quality of financial reports in terms of company's operations and financial statements. The process is mainly geared towards ascertaining whether the financial reports are correct and reflect proper internal controls. For the departmental staff at Ford Motor Company, it is important to understand that the auditors' visit is to examine their operations based on the 2012 annual report.

One of the things that the company's staff should expect the auditors to do is to examine the implementation of financial controls provided in the annual report and discussed by the firm's top level management before the commencement of the auditing process. The auditors are primarily visiting the department as part of conducting fieldwork after holding discussions with the firm's top management. In order to determine the implementation of the financial controls, the auditors will watch the department's employees as they carry out various tasks to ensure that the workers are performing these tasks correctly. The suitability of the employees' actions and work is reviewed based on regulations that govern them and organizational policies implemented by Ford Motor Company.

Secondly, the staff should expect the auditors to review files to ensure that all the paperwork is in order based on reports provided to the company's corporate offices. For instance, the auditors are likely to randomly review the firm's refund or sales records to ensure that the sales or refund records reflect those documented in the financial report. In addition, the staff should expect auditors to review records regarding the company's bank operations to ensure that internal control procedures are being followed.

The third expectation for the staff is for auditors to determine control risk based on a scale from high or weak controls to low or strong controls (Rittenberg, Johnstone & Gramling, 2011, p.230). During this process, the auditors will seek to determine the kind of misstatements that are likely to occur and any deficiencies in the firm's internal controls. If their evaluation of internal controls is effective, the auditors will test whether the established controls are working based on the responsibilities and duties of the department's employees. This will be followed by determining the most effective way for integrating the audit of controls and that of financial statement.