Question

Auditing is a valuable skill in accounting and business, as the odds are very high that you or your organization will be subject to a compliance, federal, IRS, internal, government, or revenue audit at one point in your career. Accountants are required to make professional judgments on both the financial accounting issues and internal accounting forecasts within their organization. The auditor must provide fair, unbiased, materially correct information for investors, employers, employees, and independent stakeholders. This course will help you navigate the relevant processes to provide that unbiased, accurate information.

The purpose of the assessment is to familiarize you with the process of auditing and what to do with the auditing information once you have it. You will explore how to plan audit work, analyze financial statements, perform tests on that information, and properly and professionally communicate the results of an audit.

For this assessment, you should assume you are on the internal audit staff of a publicly traded company. Choose one of the following companies: Walmart, Target, Sears, Kroger, or Amazon. You will be required to obtain the last two years’ worth of financial statements and a recent audit report. The internal audit group at the company is tasked with preparing for an upcoming revenue audit and analyzing the business risk internally to mitigate audit findings. You will conduct an internal audit of the company using the information gathered and create a report. Then, you will prepare appropriate memos analyzing the audit report you have prepared, while offering feedback and recommendations.

For Milestone One, you will submit a draft of the procedures and field work required for conducting your audit process. Describe how you would conduct the audit process for the company you have chosen, including the analytical procedures you would use to investigate selected business transactions. Explain the appropriate field work needed to review high-risk business transactions for cash and revenue, and create a test to assess appropriate assertions for designated high-risk business transactions.

Prompt: Outline the field work and procedures that will be involved in conducting the internal audit report and explain how you intend to communicate your findings. Create a test to assess appropriate assertions for designated high-risk business transactions.

Specifically, the following critical elements must be addressed:

A. Describe how you would conduct the audit process, incorporating the analytical procedures you would use to investigate selected business transactions.

1. What steps will you take to review the company’s business transactions?

2. What would your plan be to utilize these procedures?

B. Explain the appropriate field work needed to review high-risk business transactions for cash and revenue.

1. What would you need to do in the field to investigate these?

2. Could you convey this information through charts or other supporting documentation?

C. Create a test to assess appropriate assertions for designated high-risk business transactions.

Guidelines for Submission: Your paper must be submitted as a 3–4-page Microsoft Word document with double spacing, 12-point Times New Roman font, oneinch margins, and at least three sources cited in APA format.

Answer 1

Ques 1)Describe how you would conduct the audit process, incorporating the analytical procedures you would use to investigate selected business transactions.

The analytical procedures are considered an important part of audit. This mainly involves the comparison of values recorded and the expectations which are developed by auditor during carrying of audit procedures. The analytical procedures are considered to be the evaluation of both financial and non-financial data of organization. It also helps the auditor in analyzing the relationship and fluctuations which are not consistent with the other finacial statement components or the figures are deviated from the projected figures
Audit & Analytical procedures
Planning: The audit plan is considered an outline that how the audit will be approached in organization. It helps the auditor of to address the scope and objectives of carrying the audit.
Account Comparison:
•Comparison of Account Balances
•Computation of signification ratios of organization and compare these ratios with industry ratio or the ratios of previous year of organization.
•Computation of ratios by using both the non-financial and financial data.
Report Review & Drafting: The auditor after gathering all the necessary information, will draft the report and present it to the management of organization highlighting the transactions and facts noted during the course of audit. The auditor on the basis of its report gives his view that whether the financial statement of organization represent its fianacials in a true and fair manner or not

Ques 2)What steps will you take to review the company’s business transactions?

The following steps will be taken while reviewing the business transactions:
•The assets which are to be transferred in any transaction will not be encumbered by any kind of debtor any type of other undisclosed liabilities.
•The parties should be authorized to enter for the transaction.
•There should not be any type of pending lawsuits against the other party with whom the transaction is taking place.
•The intellectual property if any being transferred should be owned by the party who is making the transfer.
•The receivable accounts should be reconciled
•The payable accounts of the organizations should be reconciled
•Review the changes of audit trail

Ques 3)What would you plan be to utilize these procedures?

The analytical procedures mainly served as an attention-directing device which provides a direction to the auditors. The auditor should make a detailed plan before utilizing the audit procedures. The auditor should first determine the timing, nature and extent of their audit procedures before analyzing the analytical procedure.depending on the transaction pattern (retail , ebusiness or other) computations are done on sample basis and trend analysis is to be used for longer period of time.

Ques 4)Explain the appropriate field work needed to review high-risk business transactions for cash and revenue.

The appropriate field work which are needed to review the high-business transactions for cash and revenue are:
•Identify the important disclosures, relevant assertions and accounts in the revenue cycle.
•Identify and assess the risks of material misstatements in the cash and revenue cycle.
•Identify and assess the risks of fraud of material misstatement in the cash and revenue cycle.
•Identify and assess the risk of control of material misstatement in the cash and revenue cycle.
•Appropriate test of control should be determined and the results of test should be considered in cash revenue cycles disclosures, accounts and assertions.
•Determination of appropriate responses for identification of risk of material misstatement for cash and revenue cycle of disclosures, accounts and assertions.

Ques 5)What would you need to do in the field to investigate these?

The investigations will be done for the followings:
•The process of receiving the order of customers, shipping and billing of products or goods, cash collections and process of approval of credit for sale.
•The significant accounts should be investigated including accounts and revenue receivable. The evidences should be obtained for each and every financial statement assertion.
•One should have to obtain the information about inherent risks, material misstatements related to true and fair view of financial statements. The investigation is to be done of strength and weaknesses of internal control of organizations.
•The results obtained from analytical procedures should be investigated properly.

ques 6)Create a test to access a appropriate assertions for designated high-risk business transactions.

For accessing the appropriate assertions for designated high-risk business transactions, should focus on the internal control of organizations. The auditor should create a test to determine the efficiency of internal control by checking out the effective operations, compliances and financial reporting done by management.
The auditor of organization will check the efficiency of each and every department of organizations because on the internal control of organization, the functions and efficiency of organization depends.

Occurrence-The transactions recorded must have to be occurred .There must be some supporting documentary evidence
Completeness-The transactions taking place in organization should have to be recorded while preparation of financial statement
Accuracy-The transactions taking place in organizations should have to be recorded at appropriate amounts.
Cut-off-The transactions taking place in organizations should be recorded in the accounting periods.
Classification-The transactions taking place in organizations should be presented truly and fairly.
Existence-All the liability, equity and assets should truly exists.Again these need to have have physical checks and documentary evidence

This a guideline , you can expand on any point you like

I have chosen an e-commerce website to write the above answer, the company you choose the broad outline will remain same , so you can apply the concepts accordingly