...Student ID Anil 12348982 TABLE OF CONTENTS 1. Control related terms………..……………………………………………….. 3 2. Tone at the Top............................……………………………………………...8 3. Conditions of the fraud......…………………………………………………….10 4. Control reliance testing………………………………………………………..11 5. Control deficiency..............................…………………………………………12 6. Promoting personnel across functional departments………………......………14 7. Audit Materiality...……………………………………………………………..15 8. References……………………………………………………………………..16 1) CONTROL RELATED TERMS • CONTROL ENVIRONMENT It is the main component of the internal control that management designs and implements to provide reasonable assurance that their objectives would be met. The control environment consists of the actions, policies and procedures that reflect the overall attitudes of top management, directors and owners of an entity towards internal control and its importance to the entity. It provides discipline and structure, and encompassing both the ethical values and technical competence. Management has to be serious and provide indications to the employees that they are very serious about the policies and procedures that have been adopted by the company with respect to the controls. The biggest mistake that Societe Generale’s committed was to be least bothered about the...
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...Internal Control Understanding and Documentation Project- EICO Iman H. Al Shawab Table of Contents Part I - Understanding of Entity and Business Environment: 3 Business Overview: 3 Suppliers: 3 Operations: 4 a. Suppliers 4 b. Customers: 5 Part II- Understanding of the Entity’s Internal Control Design and Implementations: 6 Part III: Audit EICO 11 Accepting the Audit and Perform Initial Audit Planning 11 Part I - Understanding of Entity and Business Environment: Business Overview: Emirates Industrial Converting Factory (abbreviated EICO) which is divided into three separate divisions, carton, plastic and tissue. EICO is a manufacturing company which is owned by a local investor Mr. Bader Fares, hence it is a sole proprietorship. It is located in Industrial Area # 15 – Sharjah, UAE. As the other companies in the region, the main contacting channels of this company are through phone +97165344122, fax +97165344133, P.O Box 27074 and email eico@emirates.net.ae. In order to get the information needed to analyze the internal control procedures of this company we needed to carry out interviews with the responsible manager at the carton division at EICO. Specifically, we interviewed the Administration manager at EICO Mr Amer Al Meslat. As stated above, EICO is divided into three divisions and this paper will be concentrating on the carton division. This division operates in the carton industry, specifically in the packaging part of the industry. Furthermore...
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...Jessica Ganyuma Audit Planning and Control Professor: August 23, 2015 Ernst & Young is an accounting firm founded by Arthur Young (1863-1948) and Alwin C Earnest ((1881- 1948). Alwin started Ernst and Ernst with his brother Theodore in 1903. Arthur formed his accounting firm with his brother Stanley named Arthur Young and Company in 1906. Both companies were a success and quickly emerge into the global marketplace. Around 1924 both firms “ allied with prominent British firms”( ). Ernst and Young never met one anther and died days of each other. Their firms combined in 1989 forming Ernst &Young. Ernst & Young provides audit, tax, business risk, technology and security risk services and human capital services worldwide. Ernst & Young is one of the “Big Four” accounting firms. The company has over 190,000 employees and operates in over 150 companies. There are steps in planning an audit and designing an effective audit program. When it comes to planning the auditor must first decide whether or not to accept a new client. The audior must identify “ whey the client wants or needs and audit” (p 209). The auditor must obtain an understanding with the firm about the terms of engagement to avoid any misunderstanding and the auditor must develop “an overall strategy for the audit, including engagemetnet staffing and any required audit specialists” (209). When it comes to designing an effective audit program the auditor...
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...The Audit Report and Internal Control Evaluation University of Phoenix Michelle Melville Auditing/ACC 546 April 21, 2014 Professor Hillary Edmondson Auditor’s Responsibility for Detecting and Reporting Fraud It is the responsibility of the audit engaged in the audit process to detect material misstatement in management’s assertions. These material misstatements must also be properly reported. Arens et. al (2012) defined fraud as “…any intentional deceit meant to deprive another person or party of their property or rights” p 433. Fraud as it relates to financial reporting is the intentional misstatements of the company’s financial statements and the misappropriations of the company’s assets. In conducting the audit, the audit company needs to be able to identify whether the conditions for fraud, as indicated by Arenet. al (2012) exists. These conditions are; incentives or pressures, opportunities, and attitudes or rationalizations. The existence of certain factors help the auditor to identify whether the conditions for fraud exists. According to SAS 99 auditors are required to enter into the audit engagement with professional skepticism, a questioning mind, and must critically examine and evaluate audit evidence using audit procedures. In using professional skepticism the auditor must never assume the honesty or dishonesty with management reporting. The conditions for rationalization may cause even the most honest person to make allowances for committing fraud...
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...Audit Report and Internal Control Evaluation Nathalie Salib University of Phoenix ACC546/PR April 9, 2015 Prof. Rafael Marrero - Diaz ANDERSON, OLDS & WATERSHED Certified Public Accountants Independent Auditor’s Report To the Board of Directors of Apollo Shoes, Inc. We have audited the accompanying balance sheets of Apollo Shoes, Inc. as of December 31, 2007 and 2006 and the related statements of income, shareholder’s equity and cash flow for the two years in the period ended December 31, 2007. Apollo Shoes’ management is responsible for the financial statements presented, for maintaining effective internal control over financial reporting, and for its assessment of internal control. Our responsibility is to express an opinion on these financial statements, an opinion on management’s assessment, and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements including examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the...
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...of Apollo Shoes Inc. From: CBA Auditing Firm Re: Audit Report and Internal Control Evaluation Date: June 10, 2013 CBA Auditing Firm has audited the balance sheets of Apollo Shoes as of December 31, 2012. In addition, our auditing firms also reviewed statements of income such as shareholders equity, comprehensive income, and cash flows for the same period. Our company also assessed Apollo Shoes financial reporting internal controls based on the Committee of Sponsoring Organizations of the Treadway Commission (COSO criteria) and determined that they are adequate and effective for the period ending December 31, 2012. Apollo Shoes Inc. management holds sole responsibility for maintaining effective internal controls, validity of their financial statements. CBA Auditing responsibility is only to reflect an opinion on management’s assessment, the company’s internal controls, and the financial statements based on the results of our Audit. Our audit was conducted in accordance with the standards set by the Public Company Accounting Oversight Board. These standards require for our organization to prepare and execute the inspection to attain reasonable assurance of whether Apollo Shoes Inc. financial statements are without material misstatements and determine if the internal controls are effective enough over financial reporting for all material aspects. Our audits provide a reasonable basis for our opinion; therefore the audit included the examination of; * Evidence supporting...
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...Relationship between Internal Controls and the Audit Process Internal controls are the policies, practices, procedures, and processes that management implements in order to ensure the accuracy and fairness of the information recorded in company financial statements. Traditional management practice has been to define a performance expectation and monitor employee performance for deviations from established performance standards. Traditional auditing has also followed this management practice with regard to internal controls. Auditing traditionally has involved reviewing and testing established policies, practices, procedures, and processes for evidence of non-compliance. The result of this type of auditing is that the auditor effectively becomes the internal control cop. Although the auditor may be effective at finding deviations from the current internal control scheme, the auditor provides little value beyond that to the client. Modern management philosophy deviates from the traditional philosophy in choosing to focus on the positive of the employee relationship by inspiring employees to greater heights rather than setting a bar and punishing employees who fail to reach the bar. Auditing is most beneficial to the client when it follows the same path. Attestation where an auditor offers an opinion as to the quality of the existing financial statements is only one area that an auditor performs (Hayes, Dassen, Schilder, & Wallage, 2005). When auditors realize that...
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...CHAPTER 6 INTERNAL CONTROL IN A FINANCIAL STATEMENT AUDIT Answers to Review Questions 6-1 From management's perspective, the internal control provides a way to meet its stewardship or agency responsibilities. Management also needs a control system that generates reliable information for decision-making purposes. The importance of internal control to the auditor is rooted in the second standard of fieldwork. The controls that are relevant to the entity's ability to initiate, record, process, and report financial data consistent with management's assertions are the auditor's main concern. The auditor needs assurances about the reliability of the data generated within the entity's internal control system in terms of how it affects the fairness of the financial statements and how well the assets and records of the entity are safeguarded. 6-2 The potential benefits and risks to an entity’s internal control from information technology include (see Table 6-1): Benefits: • Consistent application of predefined business rules and performance of complex calculations in processing large volumes of transactions or data. • Enhancement of the timeliness, availability, and accuracy of information. • Facilitation of additional analysis of information. • Enhancement of the ability to monitor the performance of the entity's activities and its policies and procedures. • Reduction in the risk that controls will be circumvented. ...
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...Audit Project 11A-1) Sales controls: 1. Control-Controls are made when the clerk entered the orders. Error or fraud controlled-At the time of billing and delivery there is errors in the sales transaction. 2. Control- When the computers are being prepared, they are given numbers to sales invoices. Error or fraud controlled-Controls the recording of sales to confirm completeness. 3. Control-The customers are mailed monthly statements. Error or fraud controlled-Controls the recording of inaccurate sales to customer accounts. 11B-1) Cash receipts controls: 1. Control-The receptionist uses cash receipts, which are prelisted. Error or fraud controlled- Based on the recording of cash receipts and the controls of cash abstraction. 2. Control- The accounts receivable computer program is handled by the accounting manager. Error of fraud controlled- Controls the misuse of cash receipts and errors and incomplete posting to records of receivables. 3. Control- The computer summaries of collection of cash and cash sales are reconciled to prelisting of cash receipts and deposits by the accounting manager. Error or fraud controlled-Controls the cash abstraction and the inappropriate recording of cash sales and receipts. 11A-2) There are multiple weakness found throughout. One in particular is the sales invoices, which are created and mailed before to supply of goods. An error that could possibly occur is the qualities of goods...
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...LJB Company Audit Report regarding Internal Control Activity Requirement Evaluation for Initial Public Offering and Indelible Ink Printer Procurement Recommendation Author: Phillip Stevens, Buck Stops Here Accounting Associates Securities Exchange Commission Internal Control Requirement Explanation As part of the Initial Public Offering application process with the Securities and Exchange Commission, companies are required to document and validate their internal control activities including policies and procedures. The internal controls must ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Safeguarding assets against theft and unauthorized use, acquisition, or disposal is also part of internal control “best practices”. The Securities Exchange Commission guidelines for internal control activity validation include one or more of the principles: • Segregation of duties requires that different individuals be assigned responsibility for different elements of related activities, particularly those involving authorization, custody, or recordkeeping. For instance, the same person who is responsible for an asset's recordkeeping should not be responsible for physical control of that asset. • Proper authorization of transactions and activities helps ensure that all company activities adhere to established guide lines unless responsible managers authorize another course of action. Proper authorization...
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...Testing and Monitoring Security Controls & Security Audits and Assessments Identify at least two types of security events and baseline anomalies that might indicate suspicious activity. * Authentication failures are one type of security event. A baseline anomalie that may indicate suspicious activity are unauthorized access attempts that can be found within log files. The log files contain records of all types of security events such as logon events, changes in system configuration and attempted violations of policy as well as system events like service startups and closures, errors and system warnings. * A second security event could be a sudden increase in overall traffic. It could simply mean that your website has been mentioned by a popular source, or it could mean that someone is trying to cause harm to your site. Given a list of policy violations and security breaches, select three breaches, and consider the best options for controlling and monitoring each incident. Identify the methods to mitigate risk and minimize exposure to threats or vulnerabilities. * Problem: Removable storage drives introduce malware filtered only when crossing the network. Solution: Limit user privileges that only include those that are required by the duties that are assigned to that individual. This will hopefully make it clear that no removable storage devices are to be connected to the network, no matter the circumstances unless they are screened first. * Problem: Predictable...
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...communication that expresses a conclusion about the reliability of a written assertion of another party. Audit of historical financial statements: A form of attestation services, the auditor issues a written report expressing an opinion about whether the F/S is in material conformity (一致) with accounting standards. e.g.: listed company must provide shareholders with annual financial statements that are audited by an independent accounting firm. Review of historical cost financial statements: A form of attestation services, a public accounting firm issues a written report that provides less assurance than an audit as to whether the financial statements are in material conformity with accounting standards. Auditing standards: Establish mandatory (强制) requirements and provide explanatory (解释) guidance to auditors in fulfilling their professional responsibilities in the audit of financial reports. Auditing: Is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be performed by a competent, independent person. Compliance audit: 合规性审计 One of three primary types of audits, a review of an organization’s financial records performed to determine whether the organization is following specific procedure, rules or regulations set by some higher authority. An audit performed to determine whether an entity that receives financial assistance from the Federal Government...
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... | | |Details of Subject | |Qualification |FNS60210 Advanced Diploma of Accounting | |Subject Name |Auditing and Reporting | |Details of Unit(s) of competency | |Unit Code |FNSACC602A |Unit Title |Audit and Report on Financial systems and records | |Details of Student | |Student Name | |Student ID | | |College | | |Student Declaration: I declare that the work submitted is my own, |Signature:...
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...1 Session 4 Audit Planning; Materiality and the audit risk model Auditing: Principles and Methods 2 After studying this session you should be able to: 1. Discuss why adequate audit planning is essential 2. Make client acceptance decisions and perform initial audit planning 3. Gain an understanding of the client’s business and industry 4. Assess client business risk 5. Perform preliminary analytical procedures 6. Apply the concept of materiality to the audit 7. Define risk in auditing and the audit risk model Auditing: Principles and Methods 3 8. Consider the impact of engagement risk on acceptable audit risk 9. Discuss the relationship of risks to audit evidence 10. Answer the Review Questions Auditing: Principles and Methods 1. Audit Planning 4 Why is adequate audit planning essential? “The auditor must adequately plan the work and must properly supervise any assistants”. There are three main reasons why the auditor should properly plan engagements: to enable himself to obtain sufficient appropriate evidence, to keep audit cost reasonable and to avoid misunderstanding with the client. Auditing: Principles and Methods 1. Audit Planning 5 An important part of audit planning is assessing acceptable audit risk and inherent risk because it helps determine the amount of evidence that will need to be accumulated and staff assigned to the engagement. Acceptable audit risk is a measure of how willing the auditor is to accept that the FSs...
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... STUDENT: Chien-Yun Tseng UTD ID# 2021195349 Table of Contents INTRODUCTION................................................................ 3 CHAPTER1. THE CLIENT ACCEPTANCE /CONTINUATION PROCESS, INCLUDING ESTABLISHING AN UNDERSTANDING WITH THE CLIENT ... 4 CHAPTER2. OBTAINING AN UNDERSTANDING OF THE ENTITY AND ITS ENVIRONMENT, INCLUDING INTERNAL CONTROL .................................. 5 CHAPTER3. PRELIMINARY ENGAGEMENT ACTIVITIES ....................... 8 CHAPTER4. ASSESS RISKS AND ESTABLISH MATERIALITY ................. 9 CHAPTER5. CONSIDER INTERNAL CONTROL .................................... 10 CHAPTER6. PLAN THE AUDIT ............................................................ 13 CHAPTER7. COMPLETE THE AUDIT ................................................... 16 CHAPTER8. EVALUATE RESULTS AND ISSUE AN AUDIT REPORT .... 17 REFERENCE ............................................................................................. 18 INDEPENDENT AUDIT REPORT................................................................ 19 ENGAGEMENT LETTER………………………………………………………..20 FINANCIAL STATEMENT .......................................................................... 22 2 INTRODUCTION The history of the Krispy Kreme began in the mid 1930s. Vernon Carver Rudolph, the founder of Krispy Kreme, with his father and brother acquired the doughnut shop from his uncle. They...
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