Part 1: The Initial Audit
1) What additional work could the Internal Audit Department perform prior to issuing the audit report?
The internal audit’s work is necessary to the entity. The internal audit can accumulate evidences from different documents, statements and reports. Their reprehensibility is to provided reasonable assurance in entity’s daily operation. In this case, there are some materials has been founded in MCS. From my opinion, the internal audit could pay more attention on the manager’s internal control evaluation. The additional work can be started by evaluating all financial records to ensure the accuracy of the financial statements, and reviewing administrative control with the university policy and regulations to
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Part 3: The Fraud Audit
1) What should have been the key points of the audit/fraud investigation report? What supportable audit conclusions could be drawn?
The audit/fraud investigation report should included 4 parts.
A. Introduction and Scope: This is the first section in the report. This contains background, specific concerns, objective and timing. In this case, the background is the telephone call from a local repair shop owner who was working on a personal computer brought in from the public library. This is the main cause for internal auditors to start suspecting fraud. Besides that, the reports also need to concern the specific events, such as the MSC manager’s departure from his position. In the scope paragraph, the internal audit department revealed that they could not account in full of purchase exceeding $140,000 that had been ordered by MCS, for which the university.
B. Findings: This paragraph is based on the documents that auditors reviewed and information collected. The internal auditor accumulate evidence from these documents and find out the fraud events. The report also contained the approached used in detecting the frauds.
C. Conclusions: The conclusion part is the summary of the findings. The auditor can give some concerns based on the findings. Besides that, the internal auditor will also report the weakness in internal control.
4. The final stage is the Audit Report. This is when all of the above come together to create the report. This report will list any recommendations that the auditors feel are areas in need of changes. In regard to Smackey’s, the auditors would recommend that Kim have more interaction with Henry. She needs to know more about what is happening at the loading dock. Kim needs a firsthand look at the loading dock and the paperwork. They would address the fact that Jillian puts too much trust in her sales team and is unaware of actual projections. Because of her lack of accounting knowledge, she has allowed
With different industry definitions and viewpoints, fraud can be a tough issue for audit committee members to grasp for oversight purposes. The legal obligations of audit committee members have intensified because their standard duty of care and loyalty to the entity has increased in light of management fraud activities.
* From the e-Activity, choose one (1) of the eight (8) steps in the Clarified Auditing Standards–Learning and Implementation Plan. Based on the step you have chosen, analyze support for the action plan proposed, and make at least two (2) recommendations that would improve support of the action plan.
Moreover, the auditor should preform test for effectiveness of internal controls. He may interview management by asking questions on the process of the transactions and operational activities. He may discuss with management the process of some transactions from beginning to end and then test it by using sample testing. Also he/she should make sure that there is proper control of activities; policies and procedures for adequate segregation of duties are met.
Compare the primary auditor objectives in auditing historical financial statements to auditing internal controls over financial reporting. Identify at least two (2) objectives that are the most significant in reducing the risk of reporting errors or misstatements in financial statements. Provide a rationale for your response.
To conduct the audit, the firm must acquire sufficient understanding of the internal control processes to help determine the nature and timing of the audit. However, the audit is not designed to identify deficiencies in internal control or provide assurance. The firm will make the audit committee aware of any significant deficiencies that come to Anderson, Olds, and Watershed’s attention during the audit.
Assuming that the end result is an unqualified audit report, outline the primary responsibilities of the audit firm after it issues the report in question.
During the planning phase of the audit, you met with Pinnacle’s management team and performed other planning activities. You encounter the following situations that you believe may be relevant to the audit:
This course is the first in a two-part series that deals with auditing a company 's financial reports, internal controls, and
There are various procedures that could be taken in to account that would, if properly implemented, would have detected the frauds that occurred within the companies. There are many control risks that should have been taking regarding inventory along with preliminary audit strategies for the inventory and substantive test to be done that would have raised many flags during the typical audits as well as in depth ones.
Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting 12.1 EyeMax Corporation . . Evaluation of Audit Differences
As the Independent Auditor I would require from Pinnacle, the client a Management Representation Letter. This is a letter an auditor is required to obtain from management at the conclusion of fieldwork, confirming representations explicitly or implicitly given to the auditor, indicating and documenting the continuing appropriateness of such representations, and reducing the possibility of misunderstanding regarding the representations.
B) I think the auditors should have equal responsibility for detecting material misstatements due to error and fraud. It’s their job to make sure the financial statements are as accurate as possible. Although it may be hard to check all the information from a company it’s the responsibility of the auditor to sign off that everything is in check.
The auditing firm has been in engagement with the company throughout the period when the fraud was being committed. One of the common and clear indicators of possible fraud was the company’s cash flow statement. The company experienced positive growth in its profits from the year 1996 through to the year 1998. However, a close analysis of the cash flow statement shows that the company had experienced negative figures of cash flow from both operating and investing activities and positive cash flow from financing activities which would not sufficiently offset the negative cash flows from operating and investing. It is therefore evident
Auditors have the responsibilities as well as management to report internal controls. The auditors must examine closely management’s claim of effectiveness and also physically test the controls. After the examination, the auditors should express their opinion and any recommendations to fix any internal control weaknesses.