In other words, if the financial difficulties they encounter are the fault of the auditing firm, they will have protection from any legal ramifications they may have encountered from faulty accounting or auditing measures. Preventive measures are also part of the internal controls of the auditing firm itself, so that each person who works with that firm knows the measures that are to be taken to make sure auditing is performed correctly (Cascarino, 2012). The more preventive measures a company has, the more likely that company will be to have good, strong audits that work out acceptably for everyone involved. That may not always be the case, because having preventive measures does not mean that nothing can go wrong. Still, preventive measures typically cost less money and take less time than working to correct a problem after it has already occurred (Cascarino, 2012). Problems can quickly spread, becoming very expensive.…… [Read More]
Auditing function has undergone several transformations from the periods when it was simply a function of giving opinion but also to an error where auditors are looked upon to offer advisory roles. The auditors should therefore advice the government on the impacts of their operations on the public and on other improvements that can be made to maximize on the service delivery. In pursuing their taxation policies and fiscal policies, the auditors need to offer appropriate advice to the executive to ensure that the policies improve economic performance and improve the welfare of the society. Government expenses should improve the economic performance and ensure stability in the financial markets. If auditors provide technical advice to the governments, stability and better management will be realized hence improving the welfare of the citizens.
The management of public resources has been flooded by corruption and theft. This calls for need to conduct forensic…… [Read More]
The implementation of this standard will give auditors much more control over the audit process. This gives the auditors the tools they need to meet their responsibilities with respect to professional skepticism. Auditors are responsible for the quality of the financial statements, and this standard gives them the mandate to be sufficiently creative in the audit design so as to detect misstatement.
The change benefits experienced auditors in particular, and places the onus on inexperienced auditors to learn quickly how to assess risk. Improper assessment of the risk of misstatement will result in poorly designed audits and therefore increased risk of misstatements passing through the audit. Experienced auditors will be better able to design audits that detect misstatement because they will better understand the risks. For companies, this additional degree of empowerment to the auditors will place addition risk on the company in the even of misstatement. With the auditor…… [Read More]
IV. MIXED ECONOMY
The work of Nicoll (2005) relates that the economy of Australia is one that is mixed "with separate audit legislation for the public and private sectors." The Auditor-General audits both private and public entities although there is separate legislation relating to their operation and establishment. There are however, different requirements of public and private sector auditing in that due to the legislative requirements of the Auditor-General to:
1) Conduct performance of audits of particular kinds of government agencies and report findings to Government and Parliament; and 2) Report to Parliament on any matter. (Nicoll, 2005)
Internal controls that are required by auditors include:
1) a senior executive group, which meets on a regular basis;
2) an audit committee;
3) an effective internal audit function;
4) a current corporate plan, business risk assessment and management plan and fraud control plan;
5) Clearly specified systems of authorization,…… [Read More]
Auditing of Enron Corporation
Responsible Accounting and Enron Questions
There were numerous parties associated with Enron who were responsible for creating the "crisis of confidence" in the accounting profession. At the top of the list would be Enron's executives themselves: Jeffery Skilling, Kenneth Lay and Andrew Fastow all broke numerous rules, regulations and laws that govern accounting principles in order to increase their revenue on the income statements and in turn raise their stock prices. Among the most grievous accounting sins committed were the failing to recognize Enron's true revenue, in which revenue numbers were inflated using mark-to-market accounting; falsifying earnings so that the stock prices would stay high; and committing insider trading in order to benefit even further from their deception.
A second party that caused just as much chaos in the accounting profession was the accounting giant Arthur Andersen. As Enron's own committees discovered, the then-respected firm failed…… [Read More]
As they can use this mechanism to: protect themselves and not directly reveal this information to the general public. ("Mortgage Mess, n.d.)
A good example of this can be seen with New Century Financial during: the 2004 and 2005 audits. In this situation, KPMG discovered seven different internal controls that were considered to be: a material breach in the law. However, they did not disclose this information to investors. Instead, KMPG issues an unqualified opinion, which helped to protect them against the actions of their staff. Once the New Century began to collapse under its own weight, was the point that the KPMG would hide behind these opinions. As the company claimed that they provided accurate information, yet no one was able to see the bankruptcy of the company coming out of nowhere. This is important, because it shows how accounting firms can issue unqualified opinions about: internal weaknesses, without…… [Read More]
This is important, because having this system will ensure increased amounts of: accountability and transparency. as, auditors will keep detailed records disclosing their: findings and initial remarks. Over the course of time, this increases the accuracy of the financial reports that are being released. as, this can be used to: identify weaknesses in a company's internal and external controls. At which point, auditors can help organizations to create effective mechanisms, to addresses these weaknesses. Once this takes place, this means that financial information being provided to the public is accurate, by ensuring that any kind of loopholes are not exploited. When you have increased amounts of documentation / record keeping, this helps to prevent possible abuses through: increased transparency and monitoring. ("AU Section 369")
At the same time, the provisions of confidentiality are ensuring that the clients' interests are protected at all times. This means that auditors will not disclose…… [Read More]
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…… [Read More]
The first thing that I did for this audit was to gather the balance sheet and the work papers. This is the basic information that I used to conduct the audit. Having these two things allows me to reconcile the two. Ideally, the work papers and the bank accounts will correspond, and that they will also align with the financial statements. It was found that this was not the case. But the initial step was to gather the information.
The second step was to reconcile the information that I gathered. The work papers, bank accounts and financial statements are three different things, and all of the information should align. In seeking to evaluate these things, several issues were identified. It is not unusual to identify an area of concern in an audit. The response to this step is to check with the accounting department to try to determine how…… [Read More]
Auditing Standards must, out of necessity, be of the highest possible standards, and the ethics involved must be of the best quality possible. If they were not, they would have to be improved as soon as any disparities are noticed, and this in turn means that the standards that are specified within the Auditing Standards Board that are meant to be followed by all auditors as well as CPA firms while performing audits must be strictly adhered to, otherwise, there will be unethical accounting behavior, which is not at all a healthy phenomenon. At present, the PCOAB or the Public Company Accounting Oversight Board sets the standards for accounting behavior, wherein audits and reviews of the SEC registrants and of the ASB must be brought under the rules as specified by the quality control standards. However, one must acknowledge the fact that to much importance is being given to blaming…… [Read More]
I think this would be the case regardless of whether the investigations reveal wrongdoing or not. When my integrity is questions, it could take years to build up a sound reputation again, and I might lose a significant amount of business in this way.
In order to preserve my career, I will need to be aware of all the rules and regulations relating to my business and its practice. Before entering into a relationship with another company, I would first conduct in-depth investigations into the company's general practices, as well as its accounts and the specific areas where I will be involved. Once I have taken on a client, I would also do my utmost to ensure that the company conducts its business with integrity. If I find discrepancies, I would encourage the company to correct these, and terminate my relationship with them if they do not, even if they…… [Read More]
However, if any type of confrontation does not happen after fraud is discovered the individual is more inclined to report the transgression to an internal auditor. A 2 x 2 design was used for the experiment (p. 56).
The participants were divided into two groups. The first group consisted of forty-four students and the second group consisted of fifty-two students. The first group was assigned to a situation where the social confrontation what the present condition and the second group dealt with a scenario pertaining to the social confrontation absent condition. The present or absent social confrontation had to do with whether or not the person would confront the wrong doer before either telling the supervisor or the internal auditor. There were two types of fraudulent acts. One was fraudulent financial reporting and the other was misappropriation of assets. Of the ninety-six participants, eighteen answered incorrectly with left the remaining…… [Read More]
Three areas of heightened audit risk for Havelock Europa are cost of sales, net profit and liabilities.
Havelock's revenue was ?92,462. In 2013, it was ?89,590. In 2012, there were discontinued operations, but in 2013, none were reported. Nevertheless, the company's revenues declined in the year. Despite this decline in revenue, the company recorded a profit. The management commentary does not necessarily explain where this profit comes from. They mentioned a commitment to efficiency, and that they have paid down debt, but there is less clarity about how they made less revenue and increased their profits. The company is not paying a dividend, but they do have motivation to demonstrate to their clients that things are improving for them financially. The management commentary highlighted areas of growth in particular. While the commentary will always contain positive spin, it is fair to ask where the improved financial performance came…… [Read More]
This method has good statistical properties for a much broader class of distributions, except for efficiency, however, in spite of the fact of this assumption (Hayashi, Fumio (2000). Econometrics. Princeton University Press).
In view of this fact, dependent linear models of their unknown parameters are more susceptible than their non-linearly related counterparts. The resulting estimators, then, become more easily determinant due to these existent statistical properties. However, this leads to another complication; the response function then implies that the outcome is binary. Though possible to estimate the simple linear regression model, the independent variable y takes on the binary values of either 0 or 1 (Hayashi, Fumio (2000). Econometrics. Princeton University Press).
But are the problems? Why are there problems?
"Well, yes. Actually, there are three particular problems that arise with binary dependent variables in linear regression models. Each of these makes the use of linear regression inappropriate and signifies…… [Read More]
Leslie Fay Company Case
Leslie Fay discovered in 1992 that the company's corporate controller with some other employees had committed a serious auditing fraud which showed inflated profits. When these irregularities were found, the company had already been knee-deep in debt as there were losses of around $81 million dollars. This led to the company filing bankruptcy to protect itself against creditors. This was indeed a serious issue and one may wonder if SOX, had it been designed then, would have been able to discover the irregularities much sooner.
Theoretically speaking, it appears that the answer would be in the affirmative. A company which is closely following SOX's mandatory auditing practices of having an internal control system and independent auditors checking the presence of those controls would be in a much better position than Leslie Fay because irregularities could be unearthed sooner. With internal controls such as random checking of…… [Read More]
Accounting and Corporate Governance
How can managers fraudulently manipulate financial statements?
Managers can manipulate financial statements in a variety of ways. One approach involves inflating earnings on the income statement for the current reporting period by artificially inflating revenue and gains or by deflating expenses. This approach results in making the financial condition of the company look better than its actual condition and allows the company to meet established expectations. Another approach to financial statement manipulation does the opposite, that is, deflating earnings by deflating revenue or by inflating expenses. This approach makes the company look worse than it actually is. This tactic may be used to make the company look less appealing to potential acquirers, or it may be used to push all the negative financial information into the current period to make the company look stronger going forward.
The following list describes general categories of financial statement manipulation…… [Read More]
a) The public accounting profession has taken a number of steps to minimize potential bias towards important users. The profession has specific standards for auditing, a separation between auditing and consulting roles, and other mechanisms. The audit function itself, and the use of generally accepted accounting principles, is a means of providing neutrality in financial reporting. Standardized reporting thus delivers statements and reporting that are the same across industries, and across all different types of stakeholders.
b) There are many users of financial statements. Four important user groups are management, stockholders, financial institutions and authorities. For unionized companies, unions would also be of a high importance level. Management uses statements to assess performance, as do stockholders as their returns depend on performance. Financial institutions have corporations as clients, and lend to them, thus have an interest in the financial performance. egulatory authorities either in charge of the tax…… [Read More]
Auditing in EP System Environments
Continuous auditing is viewed as providing vital benefits to organizations. They include minimizing errors in accounting, timely organizational communication and analysis, as well as increased audit effectiveness and efficiency. The article Continuous Auditing in EP System Environments: The Current State and Future Directions by John . Kuhn explain the benefits of continuous auditing. It has further offered a discussion about the technical elements of implementing continuous auditing technology and examined the psychological effects of continuous auditing on managers. The article introduces the concept of continuous auditing by focusing on past, present, and future trends of the actual practice of continuous auditing.
The puzzling journal has been motivated by the adoption of continuous auditing. Based on empirical studies, the article has surveyed results of previous studies conducted by characterized by the implementation of continuous auditing standards as pilot tests and experimental than full-blown adoption. Given the…… [Read More]
Profession of Auditing
Evaluation of the Profession:
The profession of accounting has undergone vast changes over the years, and the traditional accountant concerned himself or herself only with recording the financial transactions of individuals, organizations, and entities. This resulted in the accountant issuing a report annually which is a financial statement that is showing the position of the firm for multiple purposes. However today there are many non-financial reporting that are also gaining prominence and there are many auditing and accounting methods that are in vogue today as compared to the earlier eras. Accounting techniques even differ with the private and public sectors. (Hollingsworth; White, 1999)
Accountants are not mere service providers who more or less towed the lines that the management dictated. Earlier perceptions have been so. However the global changes have transformed the accountant as a responsible entity who has duties to the company and investors. This has…… [Read More]
auditing and Sarbanes-Oxley Act
It is widely agreed nowadays that business and the general audit environment is fast and is going on in real-time. In this sense, the traditional financial reports and the traditional audit style may sometimes prove not enough, because they lack the essential thing in today's business environment: updated information. In this sense, continuous auditing seems to be getting more and more followers.
The theoreticians in the matter seem to define continuous auditing differently, however, most of these definitions share a common basis. As such, continuous auditing can be defined as "a systematic process of gathering electronic audit evidence as a reasonable basis to render an opinion on fair presentation of financial statements prepared under the paperless, real-time accounting system" (Rezaee et al. (2001, 151)), while the North American accounting bodies (CICA and AICPA) define continuous accounting as being "a methodology that enables independent auditors to provide…… [Read More]
Auditing Operating Standards
According to the article, GAAS were eight standards written as short statements. Over the years, it is shown that the eight standards have been integrated by further requirements and explanations in the CICA recommendations handbook. The statements have been reformed to incorporate professional ethical requirements to govern relevant accounting organizations. These amendments have been made consistent with the international standards (American Institute of Certified Public Accountants, 2009). GAAS is an independent body aiming to conduct audits in accordance with the American Auditing Standards. It establishes the overall responsibility of auditors in the process of conducting audits. GAAS provides a series of concepts and principles, and a list of audits fundamental to auditing financial statements. Therefore, GAAS can be defined as sets of standards from which quality of audits is judged or may be performed.
Purpose of GAAS
The purpose of GAAS is to identify the key principles…… [Read More]
However, there has also been hesitation within government to challenge auditors too aggressively. Because accounting scandals have the power to wipe out a major auditing firm, there is considerable sentiment that the existing industry structure needs to be protected, and that all four major firms should be kept from significant scrutiny, lest one of them collapse, ruining competition in the industry. Already the rapid acceleration of audit fees indicates oligopolistic behavior on the part of the Big Four (Ascher, 2008). As a result of this situation, a series of potential solutions was developed, including liability limitations that would allow auditors to avoid financial ruin in the event of another Enron-sized scandal. However, no action was taken on these options. Nonetheless, evidence has showed that audit quality has improved post-SOX, especially with respect to high-risk companies and companies formerly audited by lower-independence auditors (
Real Life Examples
hen the SEC began…… [Read More]
Auditing, Monitoring, Intrusion Prevention, Detection, and Penetration Testing
The network vulnerability is a major security weakness that allows an attacker reducing computer information assurance. Vulnerability intersects three elements: a system flaw, the attacker is having access to the flaw, and ability to exploit the flaw. Thus, a security risk is classified as a vulnerability that is tied to a great significant loss. The vulnerability can erode data confidential, system integrity and availability of data.
The objective of this study is to carry out analysis of two research articles that discusses the network vulnerabilities in the IT environment. (Jackson, et al.2008, Sommer, et al. 2003). Both articles believe that attackers exploit the network vulnerabilities to inflict damages in the information systems. Moreover, the two articles agree that the traditional securities such as network IDS (intrusion detection system) (Sommer, et al. 2003) and DNS pinning (Jackson, et al.2008) are no more effective…… [Read More]
In the field of nursing, both qualitative and quantitative data are useful and needed. The qualitative approach comes much from the patient and/or stakeholders. How does the patient "feel," what are some not quantittiative things one notices. Often, though, in charting a patient, a medical professional is able to quantify some of the qualitative data (e.g. complexion pale or wan; skin temperature, palor, attention span, etc.). The quantitative data are data that can be easily measured and work in tandem to provide a way to make a cogent diagnosis for the patient. Qualitative data is also part of the nurse's ability to make judgments about the quality and morality of situations, indeed, taking the principles of nursing ethics (beneficence, autonomy, etc.), many of those decision types are qualitative based. Some of this is, of course, related to secondary data sets from other research studies outside the purvue of patient-care,…… [Read More]
Audit Planning Control
The American Institute of CPAs (AICPA) has published guidelines for preparing an audit plan. The first step is the preliminary engagement activities, which is focused on establishing an understanding of the terms of engagement for the audit. The steps in the planning process are to identify the scope of the audit; to determine the reporting objectives; to consider the results of the preliminary engagement and to determine the resources that are going to be required to conduct the audit -- and the timing of when those resources will be needed (AICPA, 2015).
To audit Home Depot, it is important first to determine what the scope will be, as this will help to determine the resource requirements. A preliminary meeting with the company will help to determine this -- for example is it necessary to visit stores? Conduct inventory? Talk to Canadian HQ? Or is a visit to…… [Read More]
financial condition of a hypothetical town; Swobodaville. The paper analyzes the town's revenue structure, and expenditure profile among others. In addition, paper outlines how public organizations within this town use data from audits and assessments to increase their effectiveness.
There are several factors that are likely to influence the town's revenue structure. These factors are economic growth, taxations among others. The town has taxation waivers which may have led the increase in revenues from the first to the fifth year. There is a likelihood that the town has been having an increasing revenue base which has led to the increase in revenues. The level of government spending has steadily risen. The increase in government spending on state-provided goods and services including public and merit goods is likely to result in increased revenues for the town's households (Kirchler, 2007). Besides, incorporating revenue neutral individual income tax change that integrates…… [Read More]
eal Good Food company lost money in 2014, in comparison with turning a profit in 2013. One of the red flags that an auditor should look for is when a company records better performance -- there is little incentive to be gained from losing money. The gross margin in 2014 was 12.2% and in 2013 it was 14%. Because the company lost money, it did not pay the same rate of tax as when it made money, but that should not be the biggest red flag in the world -- again, losing money is not usually considered to be desirable.
The company noted an increase in inventories, from ?15 million to ?19.1 million. Thus, the inventory turnover went from 17.7 times to 14.2 times. Trade payables were ?21.28 million in 2013, but ?29.82 million in 2014. This is a significant increase, much larger than the increase in revenue that the…… [Read More]
Areas of Heightened Audit isk
Audit risk = Inherent risk x Control risk x Detection risk. Audit risk can be referred to as the probability that an audit team will give an outright and absolute judgment when the financial statements of an institution are in actual fact materially misstated. To start with, inherent risk is the possibility that material frauds and errors will get into the accounting system employed to cultivate and improve the financial statements. On the other hand, control risk is the possibility that the internal control system of a client or company is not able to prevent or detect material misstatements (Griffiths, 2005). Lastly, detection risk is the probability that an auditor's audit procedures will not able to detect material misstatements. Taking into consideration the financial statements and the management commentary in the annual report of Havelock Europa there are a number of areas of…… [Read More]
Auditing, Monitoring, Intrusion Prevention, Intrusion Detection, and Penetration Testing
"Unlike IP fragmentation (which can be done by intermediate devices), IP reassembly can be done only at the final destination. What problems do you see if IP reassembly is attempted in intermediate devices like routers?" [ ]
IP fragmentation is defined as the IP (Internet Protocol) that breaks datagrams into smaller fragment to assist packets passing through links and forming a smaller MTU (maximum transmission unit) than its original size. However, the fragments reassemble themselves when reaching the receiving hosts. After the receiving hosts have received the fragmented IP packet, they have to reassemble the datagram before passing it to the higher layer. In practices, the reassembly happens in the receiving hosts, however, a reassembly may be carried out by the intermediate router. For example, the NAT (network address translation) is designed to reassemble the fragments to the translate data streams.…… [Read More]
Legislation and standards affecting IT auditing
The Audit Quality Forum was established with the primary purpose of reinforcing confidence in financial reporting. Statutory auditing promotes confidence because auditors are likely to give external and objective opinions on the presentation and preparation of financial statements. Auditors are required to be independent in opinions expressed, and their work is greatly based on real world. This is challenging in particular national settings. ecently, standard setters, audit practitioners, and regulators embraced significant steps in enhancing confidence within quality of financial statement audits, considering the challenges faced in leading capital markets. IT auditing is critical to any organization. The existence of legislations and standards has ensured that auditors offer independent opinions and that their work is greatly based on real world. This study however shows that this is challenging in some situations as seen in the comparisons provided.
Latest initiatives have focused on an international…… [Read More]
The information that an auditor gathers as he runs analytical procedures in an entity he is auditing and as he gets better acquainted with the organization must be enough in determining materiality and assessing risks. Materiality is very important especially in helping the auditor determine what kind of audit report to be given. The auditor has to make reference to two key issues as regards what areas the financial audit covered. This helps in highlighting risk and materiality. These issues are: the limitation of the liability of the auditor to the significant information given to him and established by him by way of the materiality parameters he has established given his professional capacity and reasoning and his supplying an assurance that is not absolute but reasonable as pertaining to the financial statements' accuracy. The materiality is relative. A given figure or value may be viewed as material in…… [Read More]
S. through even 2009. The exponential growth of Indian outsourcing companies who have expertise in Business Process Management (BPM) have correspondingly seen an increase in their business, as many smaller American publicly-held companies do not have the people or the expertise to get their processes, systems, it plans and accounting and reporting functions in compliance to the SOX standard in any meaningful period of time (adtke, et.al.) as a result many accounting professionals also must manage outsourcing contracts with companies who specialize in BPM and SOX process-redefinition. Finally there is also more concentration on oversight at the corporate level, with companies including Boeing having a Chief Compliance Officer who reports directly to the CEO to ensure GC Initiatives gain the necessary resources to be effective. Accounting and auditing will continue to be significantly influenced by SOX for the foreseeable future as the need for compliance grows.
The accounting and…… [Read More]
We are living in times of continuous change that thrives on information. Information is the cornerstone of the financial construct of organizations. Information and access thereto drives the success of organizations in present times. The way the external world receives the statements of organizations is causal to its perception by individuals and institutions in evaluating it. As such, it is imperative that the architects and designers of this vital information need to pursue diligently highest levels of moral, ethical, and professional standards in preparing it. In providing for the financial and economical framework for such information, services of auditors are simply indispensable. The audited reports of an organization is the basis on which the organization makes its statement of intent public and helps aid the process of decision making and perception about it in the capital and investment markets (Franca & Maria, n.d.).
IMPORTANCE OF MATERIALITY IN AUDITING
"Audire"…… [Read More]
" This project is considered to be the first major update to the Smith Guidance. It was felt that the update was required to shore up some of the deficiencies in the Smith Guidance that have emerged since it was published. There were characteristics of the market that it was felt needed to be addressed, in particular the oligopolistic nature, which exposed the market to considerable uncertainty in the event of a failure of one of the Big Four (FRC, 2008). This report remains a work in progress at this time.
One company that has been impacted by the changes brought about by the Combined Code is oil services firm Lamprell. The company joined the London Stock Exchange in early 2008 and was immediately required to make changes to its governance structure in order to comply with the Combined Code. The company needed to make several changes to…… [Read More]
Auditing; Topic: Materiality in Auditing
With respect to the field of auditing, materiality is a critically important concept addressing the significance of discrepancies, amounts, and transactions. Specific materiality guidelines are required in accounting practices to avoid judgmental (legal) decisions. Materiality is applied for most, if not all, economic decisions, and the topic of materiality is not a new issue. Disclosures in re financial statements have been emphasized by courts in the United Kingdom since the 1800's, whereas materiality initially rose to importance in the United States following 1933's Security act. The significance of the materiality concept and its implications are pertinent to business decisions, as well as for analysis and preparation of financial statements and in order to apply GAAP, generally accepted accounting principles.
For the accounting field, as well as for all fields of management, the concept of materiality is central to decision making. If something is considered to…… [Read More]
Sarbanes-Oxley act on auditing
Changes as a result of the 2002 Sarbanes-Oxley law
In the wake of numerous corporate accounting scandals, several of which involved the famed and trusted accounting firm of Arthur Anderson, the U.S. Congress instituted the 2002 Sarbanes-Oxley Act (SOA). The Act was designed to reduce the likelihood of "cooked books, exorbitant [undisclosed] salaries and loans to CEOs, conflicts of interest by auditors, and hyped-up stock reports by securities analysts at some of America's highest-flying companies and investment firms" (Has Sarbanes-Oxley made a dent in corporate America's armor, 2004, Knowledge @Wharton). One of the reforms of SOA was to demand "significantly higher responsibility from audit committees of publicly traded companies" while amending the Securities Exchange Act of 1934 "to make the audit committee of a reporting company an important participant in the financial reporting process of the company" (Pandit, Subrahmanyam, & Conway 2005). Audit committees have been…… [Read More]
(the Company) to the Loan Agreement with Western Financial Services (the Lender). For the purpose of providing you with this letter, other than as set out herein, we have carried out the audit and review of the Company's financial information
Based solely on the procedures set out in the engagement letter dated October 9, 20X5 (see Attachment 1) we confirm that the Company is in compliance with all of its restrictive debt covenants with the Lender.
Our report as set out herein is confidential to the addressees of this letter and should not be made available to any other party without our written consent.
Partner cc Chairman of the Board of Directors, Keystone Computers & Networks, Inc.
From Warren Love
Date November 14, 20X5
Subject Keystone Computers & Networks, Inc.
Revenue recognition - Accounting for the sale of extended warranty…… [Read More]
Auditing Apollo Shoes
Inventory and Warehousing: Test of Controls
Testing the controls that exist in the inventorying and warehousing processes at Apollo Shoes consists of the auditor ensuring that the existing controls actually measure what they set out to measure, and that these measurements reflect that actual movement of goods and materials through the various parts of the business (Arens et al. 2008). Certain processes, such as the means by which inventory is checked in and out of various stations in the business, must also be examined (Arens et al. 2008). Ensuring that these practices are able to influence physical movements of materials and goods is key to the audit process.
Inventory and Warehousing: Test of Transaction
In order to test the transaction that exist in Apollo Shoe's inventory and warehousing processes, the specific physical and record-keeping details of the company must be determined by the auditor. A…… [Read More]
On the other hand, Enormo Corp is a big client for CPA, and exposing its case to authorities, would mean losing it.
As an alternative, CPA can refuse to work with Enormo Corp in this case and Enormo would be forced to resort to a different auditing company.
3. ecommended course of action. CPA has the right to handle this situation with the client, while trying to continue to have a professional relationship in the future. So, the suggested course of action would be to address the issue to a higher authority, start documenting it and explain to the client the implication of such documentation. The auditing firm also has the right to protect its integrity, so in this case it is essential to document the findings. However, since there is no rule that forces the auditor to report such discrepancy, the auditor will chose to restrict its actions to…… [Read More]
Once this has happened, the auditor is in a position to assess the risk of material misstatement in the financial statements. The auditor should consider, for example, management's selection and application of accounting principles in assessing the risk of fraud. Some red flags identified in the alert are when the transaction is overly complex; whether or not management has discussed the accounting of such transactions; if management is placing undue emphasis on accounting treatment of a transaction; if transactions involve third parties, including special purpose entities; and if the transactions do not have sufficient substance.
The alert prescribes a course of action for situations when an auditor believes that there is a significant risk of material misstatement. The auditor must identify his or her findings in an engagement completion document; document actions taken to address significant unusual transactions and must state the basis for the conclusions reached.
In the Lehman…… [Read More]
hythm on the Vine is a concert series that is run on a charity basis by the Shriner's Hospitals for Children. hythm is a concert series and the size of the events is growing rapidly, so there is a need for the Shriners to implement proper procedures for financial management and cash handling at these events. Members of the public pay for their tickets with credit cards or online, but there are some ticket purchases at the events, and in some instances there are cash purchases of food and beverages available. There are several different ticketing tiers, with the highest level of sponsorship at $5,000 and lower levels down to $35 tickets at the picnic area. The picnic area generates cash sales of food and beverages in particular, as many picnic guests rely on ad hoc food purchases. In addition to ticket sales, there are silent auctions as well.
There…… [Read More]
egulatory and Compliance
Auditors, consultants and security professional owe to their clients stakeholders a duty of care in the performance of their duties. The duty of care requires these professionals to observe prudence in all circumstances regarding their actions and evaluations (Boynton & Johnson, 2006).
Contribution of the PCAOB towards Independence of Auditors of Public Companies
It is sometimes ignored the contributions made by PCAOB towards improving corporate governance in public companies by generating better focus upon accounting and audit practices. A series of failures in the various functions of a public corporation to protect the investing interest of public corporations contributed the creation and enactment of Sarbanes-Oxley Act (SOX). Despite there being criticisms against the effects of PCAOB the board has contributed towards a higher degree of professionalism on public corporation auditors. An Important contribution of the board towards this independence is through the assertion that the audit companies…… [Read More]
S. Navy has an excellent product mix as they are working to attract, recruit and retain key members of each position segment they have. The recruitment of the most highly skilled areas including nurses and physicians is the most pressing and requires the greatest level of consultation and one-on-one recruiting effort. The recruitment of Naval physicians is a critical need; it's clear from its position on the website and often there are face-to-face discussions and recruitment efforts on the part of the U.S. Navy to gain physicians directly into their branch of the service.
How is the product (good and/or service) of the organization you are auditing, currently distributed?
The U.S. Navy distributes it current set of recruitment offices throughout 26 American cities, which are accessible from the following Website: http://www.cnrc.navy.mil/.The focus of each of the 26 city sites is on tailoring the recruitment process to regionalized needs…… [Read More]
External Corporate Communications Audit
Demonstrate how you would conduct an external corporate communications audit
An external corporate communications audit is a critical undertaking that must be carried out in every organization. Auditing processes are common when it comes to the realization of the basic avenues of growth and development in organizations. In order to realize the best fruits of service from the department of communication, the channels of communication should have to be renewable or accessible for audit. The first section will be used for major auditing activities. The second avenue of the auditing process will involve the personnel that have been put in place as a measure of oversight between the channels of communication, communication processes, and the major pillars of communication within a corporation. Furthermore, it is important to realize the importance of having a sound truth and recognition avenue where the auditing processes are to be executed…… [Read More]
A market research plan is the systematic study that deals with the gathering and analysis of the concerned data to assess the role of a certain company in the market and persuade the customers to by their products. Marketing research assist the companies to design better strategies for future with respect to customer behavior (Pickett, 2010).
Marketing audit: It is a systematic and comprehensive evaluation of a company's activities and the results achieved due to its capabilities .In order to carry out marketing research one must understand the role of marketing audit in research.
PUPOSE OF THE AUDIT (Wal-Mart)
Marketing audit is necessary because the Wal-Mart has to compare its performance with the constantly changing market environment. There are certain micro and macro environmental factors that affect the business and marketing operations of the retail business of Wal-Mart largely. A detailed description of them is as under:
Microenvironment:…… [Read More]
US General Accounting Office & National State Auditors Association. "Management Planning Guide for Information Systems Security Auditing." Issued 10 December 2011. Retrieved from http://www.gao.gov/special.pubs/managementpln.pdf
his source is a useful reference that can help determine the history and background of I security and federal government regulation. his report is the first of its kind and can help provide deep background information on the topic at hand.
Spremic, M., Ivanov, M., Jackovic, B. (2012). I Governance and information system auditing practice in credit institutions in the Republic of Croatia. International Journal of Applied Mathematics and Informatics, 2(6), 2012: 101,109. Retrieved from http://naun.org/multimedia/UPress/ami/16-201.pdf
his source provides a study to base the effectiveness of I governance. Despite a question of relevance due to the geographical location of the study, the information still holds value because of the questions the article essentially asked. he study focused on financial institutions performance and actions and their reliance…… [Read More]
International Accounting and Auditing Standards
International public sector accounting standards (IPSAS) are developed and put forth by the International Public Sector Accounting Standards Board of the International Federation of Accountants (IFAC). International private sector accounting standards are known as International Financial Reporting Standards (IFRS). They are put together and put forth by the International Accounting Standards Board (IASB), a self-governing standard generating body of the International Accounting Standards Committee Foundation. The IFRS for SME's is a self enclosed standard, intended to meet the requirements and abilities of small and medium-sized entities (SME's), which are anticipated to comprise over ninety five per cent of all corporations worldwide. It is constructed on the basis of full IFRSs, yet, a lot of the principles for distinguishing and gauging assets, liabilities, earnings and expenses have been cut down, subjects not relevant to SME's have been left out, and the amount of necessary revelations…… [Read More]
Change Management Audit
While technology and information systems are there in order to make management much more efficient, these systems may also expose an organizations to various risks which might often be serious in nature. These risks increase when changes are brought about in an existing system. In order to minimize such risks it is important that organizations have a change management plan, which is duly audited and tested for compliance before change is implemented.
With the advent and progress in the field of Information Technology, the corporate sector across the globe has increased the incorporation of technology in business practices greatly over the years. Besides assisting in communication and production related tasks, Management Information Systems and knowledge managements are important and integral part of organizational management that play a vital role in ensuring efficiency and quality management. That said, the rapid progressions in technology mean that the preceding technologies…… [Read More]
Maybelline positions itself as the most innovative make up producer. The company has strengthened its position on the international market due to the sales force ensured by L'Oreal, who acquired Maybelline. stor positions itself as a high quality make up producer.
The main customer segment is represented by women aged between 20 and 35 years old. These customers have a medium income and medium to high education. They have a modern lifestyle, and are interested in the life of celebrities they admire. They are interested in fashion, and in cosmetics products that present new characteristics. They are oriented towards make up products of higher quality, but have an average budget.
nother customer segment addressed by Rimmel London is represented by teenagers that are interested in make up products that provide a satisfactory relationship between price and quality.
The company's marketing strategy is based on providing good quality…… [Read More]
The Accounting and Auditing Enforcement Release (AER) for this proceeding is no. 3288 June, 2011. In this case there was a violation of Section 10A of the exchange Act by L&H, Howley and ood 2005 & 2006-year-end audit, in addition this proceeding also discussed the year-end audits and quarterly interim reviews of the financial statements of Locate Plus Holdings Corporation ("Locate Plus") (Collectively "the Engagements"). Howley served as the Engagement Partner and ood served as the Concurring Partner on the Engagements. The complaint alleges that, as part of Locate Plus' fraud, its CEO and CFO created a fictitious customer called Omni Data Services, Inc. ("Omni Data") and that Locate Plus then improperly recognized revenue from Omni Data. The improper Omni Data revenue was included in Locate Plus' financial statements that were part of quarterly and annual reports for fiscal years 2005 and 2006 and were included in filings with…… [Read More]
Cultural Audit of St. Cloud State University: HR Analysis and Critique
To address the deficits highlighted the cultural audit, St. Cloud University has resolved to address issues of demographic isolation, namely the sense of students that they do not have a 'connection' to the university, and the persistent problems regarding minority tensions and institutional discrimination. Perhaps the most telling survey comment came from a student, criticizing the survey structure: "I think that this survey was bogus. I can't believe you wasted $50,000 on this thing. e already know that SCSU is a hub of institutional racism" as noted in the Qualitative Analysis Section of the report. Another telling detail was that some faculty, administration and staff felt there was a notable lack of African-American and Jewish faculty members on campus, and that some felt the presence of a 'glass ceiling" regarding promotions of women. Also, disability services were perceived as…… [Read More]
Strategic Audit Format
Strategic Audit Areas
History, Development, Issues
Milestones (Identify minimum four milestones (events)
Past Issues/problems that the industry faced (Four to five issues)
Current Industry Issues (Minimum three issues)
History, development, problems
Milestones (Minimum four milestones (events)
Current Company Problems (Minimum three internal or external problems)
Present strategic posture
In the following sub-sections (a, b, c, and d), analyze the current vision/mission/goals/objectives/STRATEGIES / structure & culture of the firm
- The vision is to be a leading IT company that grows and meets customer demands on all related IT accessories including desktops, servers, computer peripherals, computer storage and various IT accessories.
The Mission of Dell as it is information technology company is provide the newest technology to create full customer satisfaction with effective cost.
- The focus of Dell INC has always been to be a leader in computer accessories and…… [Read More]
SAS Number 99 and the Corporate Audit
This report attempts to explain how the new SAS No.99 will change the way accounting firms will be required to conduct corporate audits. News about the collapse of Enron continues to dominate the American media circuits and in the wake of the now infamous Enron accounting scandal, accounting firms will be required to pay more attention then ever. Since the recent American Institute of Certified Public Accounts issue of SAS 99, the approach of auditors in the United States will for ever more be greatly enhanced. ith SAS 99 for example, external auditors will be required to discuss and gather facts with internal auditors. As of SAS 99, corporate America will now be required to monitor and share the findings of internal auditors who may be privy to critical fraud-related data residing with their clients. SAS 99 will therefore provide new opportunities for…… [Read More]
Network Audit Case Study
This study focuses on a comprehensive list of top ten tips of network and business continuity audit. These tips might lead businesses to survive and thrive in their audits without the need to overhaul their entire infrastructure.
Top ten network and business continuity-auditing tips
Segmentation of tasks distinctively: It depends on the principle of drive and conquers. It involves brainstorming about the organization's security tasks in terms of pieces and separating them into logically and physically segments. For instance, security tasks depend on ensuring people are kept on the outside by using both physical and firewall security (Bergmann & Pamplin, 2013). However, other components are safely kept on the inside using antivirus. Security does not solely imply that people should be kept from the outside. Obviously, companies have lost information from within the business. In this case, each piece must be documented and prioritized.
Documenting all…… [Read More]
Accounting and Audit Enforcement
1. The Sarbanes-Oxley Act applies to publicly-traded companies. Thus, it does not apply to non-profit entities. Nor does it apply to for-profit entities that are not publicly-traded. This is because SOX was passed specifically to address instances of accounting fraud in publicly traded companies that were undermining consumer trust in the capital markets (101.com, 2018). A publicly traded companies has a variety of different obligations under SOX that will help to reduce the opportunities and incentives for accounting fraud. Both opportunity and incentive are components of the fraud triangle – one needs to have a perceived need to commit the fraud and the circumstances with which to do so (ACFE, 2018).
Non-profit organizations have no obligations under SOX. However, there is a school of thought that holds that non-profit entities can benefit from some of the recommendations and mandates that SOX contains. Fritz (2016) writes that…… [Read More]
Strategic Management and Auditing of a McDonald's Restaurant
Are employees adhering as closely as possible to the operational protocol put in place by McDonald's management?
Which shifts (breakfast, lunch or dinner) are performing at, or above, optimal levels of efficiency, and to what factors can this success be attributed?
Which shifts (breakfast, lunch or dinner) are performing below optimal efficiency, and to what factors can this failure be attributed?
What is the average duration of stay for customers using the drive-thru line, and does this timeframe adhere to managerial dictates?
Can any of the in-kitchen machinery and devices (ovens, fryers, beverage dispensers, etc.) be enhanced to improve efficiency, and if so, how can these improvements be implemented?
Are staffing levels during the midnight-to-morning shift commensurate with the amount of customers typically served during these hours?
Which new products take the longest time to prepare and assemble, and do…… [Read More]
All other sources of energy used within my home: Apart from the electricity which is used in the home for most appliances, gas is also used in the kitchen to power the stove and the hot water boiler system for the house. This is also then used in the heating system in the house. Water is the other main source of energy which is used in the house, for washing dishes such as in the dishwasher, washing clothes, having showers, washing the car and watering the lawn. Gas is used for an emergency generator in the case of a power cut to the house, and also for some of the tools such as the lawnmower. Logs are also burned on the fire in the winter.
Areas in the home where energy efficiency could be improved: Energy efficiency could be improved by making sure that all electrical items are turned off…… [Read More]
First is that they may be different in the foreign country from the domestic one, which can give rise to implementation complications. The project's timeline and cost could be dramatically altered by differences in environmental factors. Local firms or workers may be involved, creating training costs or potential organizational cultural differences. There could also be cost considerations arising from economic or exchange rate considerations. Environmental factors can be positive, too, as solid understanding of them could allow for advantages that would not be available if the project was domestically-based.
3) it is important to honor the local customs for a few reasons. One is that ultimately your ability to do business in the foreign country is permitted by the government of that country. To offend local custom may jeopardize the entire operation. Also, the project will be implemented more smoothly if you work in line with local customs, rather than…… [Read More]
Management Audit of San Francisco's IT Practices
San Francisco's IT Practices must generate strategic reports capable of setting targets and securing its IT infrastructure. The city must identify assets and determine their importance. The city of San Francisco's IT Practices entails valuable data, which is an asset necessary for production and delivery of services and goods. Such an asset is also relevant in the social and economic activity of the city and welfare of citizens. Assets refer to IT equipment, information, operations, and facilities.
The loss of such assets reduces the city's competitive advantage. This arises from the financial expenses incurred and the loss of a technological advantage or unique knowledge of information. It would be difficult to reproduce or replace such an advantage. The city must worry about the loss of its reputation. In order to characterize, identify, and evaluate a threat, it can obtain relevant data from news…… [Read More]
Strategic Audit a Corporation1 I. Current Situation A. Current Performance How corporation perform past year terms return investment, market share profitability? B.
Nestle's performance Audit Report
Performance of Nestle in the year 2011
In the developed world the corporation faced economic frailty and uncertainty more so in the developed world. The economic down turns in the developed world economies had a significant impact on the performance of the product in the market which set in new challenges. Key to remaining afloat with all this challenges at Nestle is to focus on delivery of both short-term performance result and considering investing along the long-term profitability and sustainable lines Nestle The World's Leading Nutrition, Health and Wellness Company 32()
On top of the normal growth Nestle corporation experienced organic growths of up to 7.5%. Real internal growth was recorded at 3.9% while growth in pricing stood at 3.6% Nestle The…… [Read More]