Question

Company:Progressive Insurance 2017

Prepare a broad audit plan:

What types of material transactions are involved?

What types transaction cycles are involved

What are the high-risk areas?

What are the low-risk areas?

report: http://media.corporate-ir.net/media_files/irol/81/81824/arInter/17_annual/assets/pdf/Progressive-2017-Financial-Review.pdf

Answer 1

A transaction cycle is an interlocking set of trade transactions. Most business transactions can be aggregated right into a somewhat small quantity of transaction cycles related to the sale of items, payments to suppliers, payments to employees, and payments to lenders. We explore the character of those transaction cycles within the following bullet facets:

income cycle. A manufacturer receives an order from a client, examines the order for creditworthiness, ships goods or presents services to the consumer, disorders an bill, and collects payment. This set of sequential, interrelated activities is often called the income cycle, or sales cycle.
Buying cycle. A manufacturer disorders a purchase order to a supplier for items, receives the goods, files an account payable, and can pay the supplier. There are a couple of ancillary routine, comparable to using petty money or procurement cards for smaller purchases. This set of sequential, interrelated events is known as the purchasing cycle, or expenditure cycle.
Payroll cycle. A enterprise records the time of its workers, verifies hours and overtime worked, calculates gross pay, deducts taxes and other withholdings, and disorders paychecks to employees. Other associated movements comprise the cost of withheld earnings taxes to the federal government, as well as the issuance of annual W-2 types to staff. This cluster of activities is often called the payroll cycle.
Financing cycle. A corporation problems debt instruments to lenders, followed by way of a series of interest repayments and repayments of the debt. Also, a organization issues stock to investors, in alternate for periodic dividend payments and other payouts if the entity is dissolved. These clusters of transactions are extra diverse than the preceding transaction cycles, however may just contain appreciably more cash.
A key position of the accountant is to design an suitable set of systems, varieties, and built-in controls for each and every of those transaction cycles, to mitigate the opportunities for fraud and be certain that transactions are processed in as trustworthy and consistent a manner as viable.

With a view to investigate a relative danger classification for areas delineated by CHS chart limits and to use this classification to subsequently investigate a level of provider for charts and other CHS merchandise and offerings. The chance phases were defined as high, Medium and Low.

A model was developed and used as a software to furnish a sign of high, medium and low risk areas delineated through CHS chart limits. The model used accident occurrences (quantity vessels grounded, tonnage, men and women involved) and the chart 'wellbeing' (off-datum, quantity NTMs, final model date, unincorporated information, and so on.) as one of the most parameters for picking out danger. Additional known criteria (tanker routes, traffic, infrastructure, pilotage, navigational complexity, etc) with an right hazard weighting used to be used to check the ultimate contribution for the choice of the country wide chance area classification.

Each and every chart or product within the CHS portfolio established on these chance discipline classifications used to be then classified as a high hazard, Medium hazard or a Low hazard product. The outcome of this CHS country wide danger classification can be used to examine the useful resource allocation to produce and maintain CHS products in the given threat areas. The allocation of CHS resources to support charts and products is immediately concerning their danger comparison i.E. These merchandise within a high-hazard subject will receive the largest useful resource allocation and shall be maintained on a pre-outlined renovation cycle. The rest merchandise within the medium or low threat areas might be maintained however on a longer preservation cycle and yet another degree of provider than the products within the high-risk areas.