Audit Quality and Agency Cost
Since the advent of industrialization, there has been the presence of a bond between the people who invest and the people who manage those investments, forming a vital relationship amongst the two groups. Although with the rise of such relationships, the soaring issues of trust and confidence have been a hindrance in economic growth. Viewing the high percentage of the capital of investors or shareholders in companies being utilized to cover the costs of bearing these barriers, it is clear that the audits are being considered a necessity in the business model for the shareholders so that they are assured that their investments are secure and are ensured that they are being properly rewarded in return.

The fundamental purpose of audits has been to reinforce trust and promote confidence in the financial information that the management publishes for the shareholders. Bearing this in mind, it is vitally….

Audit planning is the first step in establishing the basis of the nature, timing, and extent of the overall audit strategy to determine the validity of the financial statements. An efficient and effective audit plan provides for a thoroughly and properly planned audit (The Importance of Audit Planning). It helps to reduce audit risk to a low level. Audit planning ensures appropriate attention to critical areas and that potential problems are identified on a timely basis.
Determine Acceptance of Engagement

Request permission from Keystone Computers & Networks, Inc. (KCN) for authorization to inquire with Adams, arnes, & Co. And for consent to reviews Adams, arnes, & Co. working papers for current year and prior year audits (AU Section 315).

Inquire for specific and reasonable information.

Information that might bear the integrity of management.

Disagreements with management concerning principles, procedures, and significant matters.

Communications to audit committees or others with equivalent authority and responsibility regarding fraud, illegal….

The most notable include:
The inability to account for risks from customers with poor credit.

The way sales are recorded with the income booked once the transaction is closed (versus when the income is received).

Preparing for sudden shifts in the economy or from competitors.

Substantive Tests

The substantive test is when we are determining if the current strategy will be effective in addressing the risks facing the firm. This is accomplished through examining the accounts receivables.

The substantive tests for KCN revealed that there are a number of risks to the balance sheet to include:

High inventories.

The use of allowances for bad debts.

The combination of these factors can cause the firm to face more risks. The best way that this can be addressed is through the test of balances. This is when the transaction must be posted in the ledger and balance sheet simultaneously. (Srivastava, 2008, pp. 577 -- 618)

The Final eporting Steps

The final reporting….

Audit Quality and Agency Theory
Auditors have existed since the 1300's and for most of that time, their role remained the same. Auditors were the life-line of governments and businesses, helping establishments maximize profit and efficiency, the benefits of which were enjoyed by everyone. As time passed, auditors were given new roles and worked routinely to assure the maximum profit of the company that employed them.

In the past 50 years, however, a tension arose between the role of the modern auditor and their employer. This tension, known as the agency theory and audit risk concept led initially to much criticism of the role of auditors in the business world. This role was further complicated as companies began giving company share incentives to their auditors to produce desirable reports. The primary case example for this abuse of accounting is the Enron case, in which the company intentionally ignored their internal auditors warnings….

3. The widening of the audit functions to include other elements outside employee hours, especially safety conditions within the workplace.

4. The decentralization of the control processes in the meaning of data collection and processing at the individual level of each of the three plants. This strategy would insure that the results are relevant and applicable in the context of the uniqueness of each plant.

5. The simplification of the control processes with the direct impact of decreased workloads for the personnel team and a sustainable increase in operational efficiency.

Question B: Internal control relevant for audit process

The organizational audit encompasses the totality of controls to ensure that the company is operating within the legally imposed standards. The first step in this assessment is represented by the internal control, which is conducted by parties internal to the organization and who will focus on a multitude of elements considered of importance. But before the….

Inadequate ecords: The auditors found that the Commission did not have sufficient records about the evnt fees due from promoters. The lack of documentation prevented the verification of correct amount payable by certain promoters on account of broadcasting rights. To rectify the shortcoming, the report recommends establishment of procedure to ensure prompt deposit of contracts for broadcasting rights etc.

Improper Use of Outside Bank Accounts

The Commission improperly used its outside bank account to deposit unauthorized revenue to pay employee overtime and inspector fees totaling $2,100. These expenditures should have been recorded in the Commission's budget account as the outside bank account is supposed to be used for payments to "licensed officials" such as referees, judges, timekeepers and ringside physicians rather than the Commission employees. The Commission also assessed some promoters for inspector fees and staff overtime despite being not authorized to do so.

The report recommends that promoters should only be assessed….

This suspicion seems to have become more prevalent in the wake of the collapse of the dot-com sector and Enron. Long-term investors polled about earnings accuracy for companies in 1990 and 2000 indicated that trust in the audit process had slightly eroded, while 34.1% of respondents said auditors had become less independent over that period (Hodge 42, 45). This, in turn, contributed to the generalized crisis of confidence that accelerated the equity market's declines in the summer of 2002 (amirez 68) and eventually drove the adoption of the Sarbanes-Oxley regulatory environment.

So far, investors seem to have regained their trust in financial reporting; the recent market decline was motivated more by a crisis of confidence in the credit rating industry and a shift in the overall economy than by any focused concern that earnings had been systematically misstated. Still, trust takes work and time to repair, and investors' memories are long.….

The management team is literally flying in the dark with no compass, altimeter, or method of navigating just how they are doing, which strategies are working or not, and what corrective action to take to improve. This lack of measurement is exacerbated by the cultural differences between guests, who may be from international locations. With no method in place for capturing the variation in expectations vs. experiences, the management team running the ocks esort Hotel is completely oblivious to how they are also being perceived by foreign guests as well.
From an International HM standpoint, the lack of measurement with regard to service efficiency, customer satisfaction by nationality visiting the resort, and areas needing the most improvement all underscore the need for a new governance model to unify all the changes necessary to ensure the success of the Thailand venture. The PCH management team needs to consider implementing a Lean….

Audit Consultancy
Lelemaple

The internal audit process is a complex system that can be managed in a variety of ways. Many organizations prefer to exercise a hierarchical structure, whereby managers at the top level are the only persons authorized to make decisions on behalf of the organization. Since the business arena has transformed itself within a complex global environment, hierarchical organizations are no longer able to accommodate the demands of business needs and competitive pressures. As a result, firms must evaluate and often reorganize their management structures to satisfy customer and market needs. The following will provide a discussion of the consultant's role in identifying potential opportunities for internal audit departments in order to meet ever-changing environmental, economic, and market needs.

Consultancy Model

The roles that internal auditors play in complex organizations have changed in recent years in light of economic turmoil and technological advancements. In addition, the organizational environment and management orientation have….

People in the company were not attentive to the amount of loans that were delinquent, who should be allowed to borrow, and how many people were making deposits. Banks like these do not realize the amount of loss they can create without properly regulating anything.
Regulation and constant updates on company or, in this case, bank spending is crucial in understanding how much the financial institution has in reserve. hat also must be taken into consideration is how much money is flowing out. HBO has most likely a lot of money going out in the form of large salaries or pensions as well as missed payments. If more communication took place to warn HBO of impending loss from missed payments or too high pay scales, perhaps they would have known just how much money would be needed when they gained losses.

Provisions are hard to determine and entail a lot of….

Qantas isk Factors
Qantas Case Study

isk Factor Identification

Some of the risk factors for Qantas are general and specific to the airline industry more than they are specific to Qantas, but yet should be mentioned anyway. Other risk factors are things that Qantas in particular is enduring and are not something endemic to the industry as a whole, at least not at this time. The different risks, both specific to Qantas and more general in nature often cause or otherwise feed each other but will each be mentioned in their own section as they all stand in their own right to at least some extent if not significantly.

isk Factor I -- General Transparency

The first risk factor that Qantas needs to be very wary of, and this is specific to all publicly traded and operating industries, would be general corporate transparency and visibility of operations. This factor is even more important when speaking….

Best Practice/Making Improvements
A clinical audit is an integral part of the healthcare system. Ferris (2002) defined linical Audit as the comparison of the actual clinical practice against the agreed and documented evidence-based standards in an effort of improving the level of patient care as cited in AGW and Daly (2008,p.4).

Importance of linical Audit

There are several reasons as to why a clinical audit is crucial in clinical practice. The main reason is that it is important in improving the quality of health care service that is offered to patients and the general community. The absence of a clinical audit would make it extremely difficult to gauge if one is practicing effectively. A demonstration of one's performance is also made difficult. The benefits of clinical audit are;

Its importance in the identification as well as demonstration of good practice that can lead to the improvement on the level of service delivery as….

KPMG served as the independent audit firm of several of the largest subprime mortgage lenders. Identify the advantages and disadvantages of a heavy concentration of audit clients in one industry or sub-industry (40marks).
KPMG did indeed serve as the independent audit firm of many of the most massive subprime mortgage lenders in the nation. There are concrete benefits and drawbacks to such strong relationships in on particular field. The most fundamental benefit is that of industry expertise. "A report on the U.S. audit market issued by the U.S. General Accounting Office (GAO) in 2008 also acknowledges the importance of industry expertise, noting that 'a firm with industry expertise may exploit its specialization by developing and marketing audit-related services which are specific to clients in the industry and provide a higher level of assurance" (Minutti-Meza, 2010). Ideally, industry expertise leads to a greater knowledge of details, a higher level of quality of….

Care and Diligence and Audit Committee Members
"The duty of due diligence and due care has been defined, generally, as a requirement that each director and officers exercise the care which ordinarily prudent and reasonable persons would exercise under the same circumstances (Duty of Diligence and Due Care)."

The concept of due care and diligence is intended to hold those with a fiduciary responsibility to a standard of care that makes them responsible for knowing what a prudent person might have known. It remains the standard for determining legal duty.

In the financial and legal community, due care and diligence is expected when audit committee members exercise their responsibilities. Audit committees first came into being when the SEC recommended that publicly held companies establish them in 1972. Audit committee roles and responsibilities have since evolved over time. That evolution included the establishment in 1987 of six specific audit committee recommendations intended to….

Internal Audit Can Improve Social Media isk Management in Financial Institutions
Internal audit in social media risk management for financial institutions

In the wake of the competitive financial service industry, the financial institutions are increasingly adopting technological advancements to engage, acquire, attract, and retain customers. The recent developments in the information technology sector are the social media platform, which is growing at a fascinating pace. Institutions, businesses and other organizations continue to invest in exploiting these services. The financial institutions use the social media platforms just as the other business entities use them. This is from the positive impacts the social media platform brings to the success of the institution engaging the media. However, as the other platforms of doing business constitute risks to the institution, the financial institutions are not any safe in the social media platform (Marta, 2006, p. 292). Thus, as the financial institutions continue expanding their presence….