Assignment Overview
Assignment Description
Choose a publicly traded company, and research its annual report. (If you cannot find it online, you can go to the U.S. securities and Exchange Commission Web site and locate a copy). These results have been audited, but for this exercise, view them as if they were not.
Part I
Read the annual report and other news items related to the company, and then complete the following tasks.
- Create a framework for your audit procedure using the Audit Risk Approach. Your framework should include the following:
o At least 3 examples of how you would mitigate risk in your audit
o At least 3 accounts or areas that you would focus your attention on for this audit
o An outline of tests and procedures that you would employ based on your company
o A detailed analysis of the sampling techniques that you would utilize for each of the 3 accounts or areas that you chose
o An explanation of the type(s) of documentation that you would require as audit evidence
- Discuss the levels of assurance that can be provided on audit reports.
- Explain how the internal controls of a company can impact the overall business.
o Define 2 internal control areas that you would focus on with your business
Part II
Deliverable Length: 800-1,000 words
Prepare an audit report for your company. Be sure to include the key elements that must be covered in a standard audit report, and discuss the circumstances surrounding each of the following:
- Explain the process that you will utilize to formulate your audit opinion.
- Discuss the methodology that you would employ if misstatements are discovered.
- Explain the common ethical issues that you could encounter during an audit.
Assignment Objectives
- Analyze the unqualified audit report and identify the required circumstances and wording for the modification of the standard report.
- Define the components of internal control and describe how an entity's internal controls affect the planning and performance of the audit or assurance service.
- Define the major transaction cycles for an entity and determine the tests of controls and substantive tests of balances that are appropriate for each of the transaction cycles.
- Define the phases of an audit process and describe the corresponding activities of each phase.
- Demonstrate an understanding of the different auditing, assurance and attestation services provided by CPAs.
- Discuss common ethical dilemmas facing CPAs.
- Discuss the elements of the standard audit report and the required circumstances and wording for modification of the standard report.
- Explain the role of materiality and risk in the audit planning process.