...conduct. The codes of ethics are essentially the same for each organization, all though the wording is a bit different between the two codes. Standards are important in both fields, so that auditors and fraud examiners have a uniform and legal approach to handle the risks inherent in organizations. Standards are important for fraud examiners so that they have uniform way of obtaining documentary evidence, interviewing witnesses and potential suspects, writing investigative reports, testifying to findings, and assisting in the general detection and prevention of fraud. Standards are important to internal auditors in similar ways but more specifically they are important in meeting the responsibilities of the internal auditor and internal audit activity. Both codes complement each other but the Institute of Internal Auditors code seems to be more in depth. Three other notable points of information I learned from the Institute of Internal...
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... Environment, strategic, organizational changes * High quality accounting, promoting integrity and sound audit opinions over short run profits * 1930’s- government adopted laws that require public companies to submit financial statements to independent auditor each year * mantra- good service, quality audits, well managed staff, profits for firm * auditors rewarded for making sound auditing decisions * decision rights to Professional Standards Group * firm did not become wealthy in the early years, partners were well respected in communities * 1950’s- Joseph Glickauf- computers to automate bookkeeping * 1979-42% of $645m fees came from consulting * 1989- split to AC and AA * accounting business grew slowly in 1990 due to increased competition and mergers * AA adopted new strategy of generating profits, “it was a matter of pride” * New rules- partners retired at 56, less experienced auditors and fewer partners overseeing audits * New breeds of partners- Samek, Allgyer, signing off on inaccurate financial statements * 1997- AC split completely and became Accenture, AA underwent setback when they didn't receive the $14b expected payment from AC * AA- 2X performance evaluation, relaxed dress code, wooden doors removed * New service- take over entire internal bookkeeping for clients- impaired quality of audits * Enron-1986, wholesale energy trading * Anderson hired Enron in 1990 * Speed up decision making-...
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...Solutions: 1. A review is performed to obtain a reasonable basis for providing limited assurance that the client's financial statements have been prepared in conformity with generally accepted accounting principles. An independent audit is designed to provide a reasonable basis for expressing an opinion concerning whether or not a client’s financial statements have been prepared in accordance with generally accepted accounting principles. There is also a major difference between a review and an audit in terms of the scope of work performed. When a review is done, the main evidence collection techniques are analytical procedures and inquiries of client personnel. Whereas, in an audit, the full range of evidence collection techniques available to an auditor is likely to be used. A review does not assess control risk, tests of accounting records and responses to inquiries by obtaining validating evidence through inspection, observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. Because reviews are generally not as rigorous as audits, considerably less evidence is typically collected in a review than in a comparable audit engagement. The issue with ZZZZ Best case is that the auditors review was not sufficient enough to review any material misstatements on the financial statements. 2. Third party confirmations should give consistent evidence in support of assertions made by...
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...and many other documents. There is no system of internal check in the organization. Later on, the auditors were appointed to conduct a continuous and detailed audit but they failed to find the embezzlement. 2. Mr. Atif was director of a company. He needed more capital so he put an advertisement in the national news papers for acquiring further capital. Mr. Ijaz (new investor) responded with intension to invest Rs. 20 million but with the condition that he wanted to see company’s audited accounts before making his final decision. Mr. Atif hired the services of a local audit firm to audit the company accounts and balance sheet. Mr. Ijaz relied on the accuracy of the audited financial statements and invested Rs. 20 million without knowing the facts that the company was in very bad state and financial position had been misstated. Mr. Atif used all the investment for his personal affairs and then declared bankruptcy. Eventually, Mr. Ijaz lost his entire invested money. 3. An auditor circulated its opinion in the press, before the final signature on financial statements, that the stock/inventory was manipulated by the directors of the organization to attract the investors but the charge was not verified yet. 4. Mr. Arslan was an auditor, who conducted the audit of Sitara Corporation. During the course of audit, he did not verify the petty cash balance intentionally. Company had faced a loss due to his negligence of duty. 5. Star Enterprises, created secret reserves...
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...AUDITING 300 Semester 2 2012 - ASSIGNMENT 2 (Due Date: 1/10/ 2012) Please answer all four questions Question 1: The external auditor can rely on the work of the internal auditor subject to certain conditions being met. One of this relates to the internal auditor reporting to the audit committee rather than to management. Required: (i) Please explain as to why this is an important condition to be met (2 Marks) (ii) Provide three benefits of the audit committee in enhancing governance (6 Marks) (Total: 8 Marks) Question 2: In your preliminary assessment of control risk, you have assessed it as low. In undertaking your tests of control you note that the results fail to confirm your preliminary assessed level of control risk. Required: Explain the impact this would have on your audit plan. (Total: 3 Marks) Question 3: The sales system of John limited is as follows. John Ltd is a wholesaler of office supplies and sells them to a number of retail outlets (customers) in the Perth region on credit. Its prices are competitive and it offers a same day delivery service for orders telephoned before noon. The sales cycle relative to the phone ordering, despatch of goods and update of ledger are as follows: i. The customer phones through an order to the sales department which raises a sales order and two invoice copies which are priced and totalled. This is forwarded to the despatch department. ii.The despatch department makes up the orders...
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...Tavonna Triplett Career Paper Accounting The different types of accounting careers are Public, Government, National, Management, Financial, Tax, and. Fiduciary Accounting. Public accounting is the most varied type and includes bookkeeping, account management and financial analysis for individuals, private businesses, public firms, government or NGOs, which are either based nationally are internationally. A public accounting business can have one or more accountants and both certified and non-certified accountants can provide public accounting services to their clients. Government Accounting specific to government agencies and ensures all revenues and expenditure are in accordance to law. The conventional accounting methods of double entry system in ledgers and journals are used here. Government accounting is differentiated from other types of accounting in respect of providing service that is not profit based but service based. Government accountants are employed by the federal government, either as a part of the IRS or any other budget or asset management division. National Income Accounting is mainly for the government and is responsible for providing the general public the data with reference to the gross national product about all market-related information, such as the value of the country's goods and services provided and its purchasing power. National income accounting gives an idea about the state of economy of a country and how and where money is being generated...
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...Question 19-25 ITEM NO. | AUDIT PROCEDURES | REQUIRED DISCLOSURESAND REASONS | 1 | (a) Inquire of and discuss with officers and other executives having responsibility for financial and accounting matters as to: The current status of items, in the financial statements being reported on, that were accounted for on the basis of tentative, preliminary, or inconclusive data.(b) Obtain a letter of representations, dated as of the date of the auditor's report, from appropriate officials, as to whether any events occurred subsequent to the date of the financial statements being reported on by the independent auditor that in the officer's opinion would require adjustment or disclosure in these statements. | The company will need to correct previous financial statements; this will also help to accurately reflect the company’s financial position. | 2 | Inquire of client's legal counsel concerning litigation, claims, and assessments. | Adjust previous financial statements to reflect the settlement and payment of the claim. | 3 | (a) Read the available minutes of meetings of stockholders, directors, and appropriate committees; as to meetings for which minutes are not available, inquire about matters dealt with at such meetings.(b) Inquire of and discuss with officers and other executives having responsibility for financial and accounting matters as to: Whether there was any significant change in the capital stock, long-term debt, or working capital to the date of inquiry. | A supporting...
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...effectiveness of internal control over financial reporting.) Independent Auditor's ReportTo the shareholders of Fast Times Corporation,We have audited the accompanying balance sheet of Fast Times Corporation as of September 30, 2009, and the related statements of income, retained earnings, and cash flows for the past year. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.Except as discussed in the following paragraph, we conducted our audit 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.We were unable to obtain audited financial statements supporting the company's investment in a foreign affiliate stated at $1,040,000, or its equity in earnings of that affiliate of $501,000, which is included in net income, as described in Note 14 to the financial statements. Because of the nature of...
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...involved in evaluating differences between expected and reported account balances Understand the audit planning implications of using analytical procedures as substantive tests of account balances Burlington Bees, an independent, minor league baseball team, competes in the North-west Coast League. The team finished in second place in 200X with an 87—57 record. The Bees' 200X cumulative season attendance of 434,348 spectators set a new record high for the team, up from 390,000 in 200W. Bank-loan covenants require the Bees to submit audited financial statements annually to the bank. The accounting firm of Hickman and Snowden, CPAs, has served as the Bees' auditors for the past five years. One of the major audit areas involves testing ticket revenues. Those revenues reached nearly $1.9 million in 200W. In prior years, the audit plan called for extensive detail testing of revenue accounts to gain assurance that reported ticket revenues were fairly stated. Michelle Kramme, a new audit manager, just received the assignment to be the manager on the 200X audit. Michelle worked previously on the Bees' prior-year audits as a staff auditor. When she learned she would be managing the current-year engagement, she immediately thought back to all the hours of detailed testing of ticket sales she performed. On some of her other clients, Michelle has been successful at redesigning audit plans to make better use of analytical procedures as substantive tests. She is beginning to wonder...
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...fell due to falsification of financial records, reporting profits well in excess of the actual. “On Dec. 2, 2001, Enron declared bankruptcy. Thousands of people were thrown out of work, and thousands of investors -- including most of the company's employees -- lost billions of dollars as Enron's shares shrank to penny-stock levels (http://www.npr.org/news/specials/enron/).” Enron is considered to be the largest corporate fallout in US history. The overconfidence of executive leaders, falsification and manipulation of financial statements, and Andersen’s hidings of the true audit findings, eventually led to the demise of this innovative corporation. Questions 1. The Enron debacle created what one public official reported was a “crisis of confidence” on the part of the public in the accounting profession. List the parties who you believe are the most responsible for that crisis. Briefly justify each of your choices. Executive management of Enron- When misstatements and irregularities emerged and were made clear to the public, the executives of Enron lost the confidence of the stakeholders in the company. Lay, Skilling were all under extreme scrutiny for the recent happenings within the corporation. Internal audit committee of Enron- Not only was the management of Enron under investigation, but the internal auditors of the company were being inspected as well. As internal auditors, they were responsible for controlling and analyzing the financial situations of...
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...little effort needed. Federal regulators were provided with data that revealed the corrupt practices of high-profile companies and their CEOs. Their bankruptcies became inevitable as the Securities and Exchange Commission (SEC) and financial analysts began to see the signs of irregularities among numerous companies. When the SEC ordered the restatement of their financial reports in accordance with the GAAP rules, it turned out that these companies were mostly founded by inflated revenues and negative financial conditions. Short after, companies reputations and financial credibility began break like bubbles, in the wake of the ensuing investigations. The result of these action caused investors once again lost their trust and confidence in America’s publicly traded companies, which eventually led to more bankruptcies. As a result, multitudes became jobless, and the trend went from bad to worse throughout the decade. these accounting anomalies was the heart of all that frauds. The accountancy profession and the role it plays came into focus. Accountants have helped in misleading the public by certifying and endorsing that the financial reports of fraudulent companies were all true and 100% correct. Investors placed their faith in the accompanying audit reports, which...
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...Questions 1. a) By hiring a member of its external audit team a company could gain insight into the auditor’s process and better devise methods of hiding fraud. b) Hiring a former auditor would greatly compromise and possibly impair the existing external auditor’s ability to remain independent. On top of having knowledge about the auditor’s practice, preexisting relationships could cause bias in the audit outcome. c) Sarbanes-Oxley Act 2002 limits the ability of corporations to hire employees of their external audit firms. Sox requires a “cooling-off” period of one year, after the audit commencement date, before a member of the auditing team can begin work in a key position with the client. d) It is not appropriate for auditors to trust executives of a client. AU section 230, auditors should exercise “due professional care in the performance of work”, hence apply professional skepticism. The auditor should be impartial to the level of management’s honesty and pursue factual evidence to support findings and conclusions. 2. a) The client can be in a more powerful position than the auditor in the auditor-client relationship if the auditor is trying to sell the client additional services. b) SOX prohibits external auditors from providing certain services to clients including: • bookkeeping or other services relating to the accounting records or financial statements of the audit client; • financial information systems design and implementation; • appraisal...
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...Ryan Smith Fraud and Illegal Acts We have been hired to perform a year-end audit on Jersey Johnnie’s Surfboards Inc., an SEC registrant. Before the audit had been completed, the engagement partner received a call from the director of ethics and compliance stating that the ethics and compliance hotline received a call from an anonymous employee informing the Company of possible accounting improprieties as well as concerns about management’s overall commitment to accurate financial reporting. This call was concerning a questionable sales transaction between the Company and independent sales representative of the Company, Mr. Sinaloa. The anonymous employee noticed a sales invoice made out to Mr. Sinaloa, dated December 31, 2010. This was suspicious to the employee because the company did not recognize revenue associated with the products shipped to Mexico until Mr. Sinaloa presented a confirmed sales order to the Company and those products were shipped. Management, the Board of Directors and the Audit Committee of the Board of Directors should respond promptly and appropriately to these allegations. “Failure to act aggressively against potential fraud could result in civil suits, enhanced criminal penalties under the U.S. Sentencing Guidelines, new sanctions established by the Sarbanes-Oxley Act of 2002, and enforcement actions by federal and state regulations. Yet planning a response raises a litany of concerns” (Breuer & Vinegrad, 2004, p. 1). Even though...
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...Breweries Limited THE SOUTH AFRICAN BREWERIES BEER DIVISION Asset Management Auditing, Benchmarking and Measures TABLE OF CONTENTS Course Map 1. General Information 2. Outcomes of this module 3. Study Material 4. Assignments 5. Guidelines to answering questions 6. The examination 7. Support for this module 3 4 5 6 7 8 9 9 2 Copyright 2011 The South African Breweries - LTD THE SOUTH AFRICAN BREWERIES BEER DIVISION Asset Management Auditing, Benchmarking and Measures COURSE MAP FOR DIPLOMA IN MAINTENANCE MANAGEMENT MODULE ONE MAINTENANCE THEORY MODULE TWO OPERATIONS MANAGEMENT MODULE THREE LEGAL COMPLIANCE MODULE FOUR ORG BEHAVIOUR – CHANGE MGT MODULE FIVE BENCHMARKING, AUDITING AND MEASURES MODULE SIX FINANCIAL MANAGEMENT MODULE SEVEN PLANNING & LOGISTICS MODULE EIGHT HUMAN RESOURCE MANAGEMENT MODULE NINE REPAIR & REPLACEMENT THEORY MODULE TEN CONDITION MONITORING 3 Copyright 2011 The South African Breweries - LTD THE SOUTH AFRICAN BREWERIES BEER DIVISION Asset Management Auditing, Benchmarking and Measures STUDENT GUIDE Asset Management Auditing, Benchmarking and Measures Module 1. GENERAL INFORMATION Welcome to the South African Breweries Maintenance Management Diploma and Bachelor’s Degree Course and specifically as a student in Maintenance Theory. We hope that you will find your studies interesting, meaningful and enriching. The Asset Management Auditing, Benchmarking and Measures Module in a manufacturing...
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...Ethics Audit Framework Essay # 3 Stephen Randall Texas A&M University – Central Texas Professor: Marshell J. Silva Ethics Auditing Ethics auditing by definition, an ethics audit is a “systematic evaluation of an organization’s ethics program and/or performance to determine its effectiveness.” This concept of ethics auditing is fairly new and few companies have conducted an ethics audit. However, performing such audits will likely become more mainstream as recent legislation encourages greater ethical accountability for companies to demonstrate they are abiding by the law and have established programs to improve their ethical decision making. The U.S. Sentencing Commission (the “Commission) has amended the Federal Sentencing Guidelines for Organizations (“FSGO”) whereby an effective compliance and ethics program must “exercise due diligence to prevent, detect, and report criminal conduct and otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with all applicable law." The Commission noted there are seven minimum requirements of an effective ethics program, standards and procedures to prevent and detect criminal conduct; Responsibility at all levels of the program, together with adequate program resources and authority for its managers; Due diligence in hiring and assigning personnel to positions with substantial authority; Communicating standards and procedures, including a specific requirement for training...
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