Assessment of Exton Industries, Inc. After evaluating the evidence collected by our staff member, I have come up with an assessment of the fraud risks. From the evidence gathered, I have concluded that Exton Industries has a weak control environment.
Auditing The auditor applied the following audit stages: Puttick et al The auditor at this stage performed a new client investigation in order to accept the new appointment as a way of managing conflicts and threats to the auditor.
The factors considered during the investigation included business reputation of Maryward Primary School. An assessment of the complication of the audit assignment and the estimated time, required to finish the work was done.
An engagement letter was prepared to provide the clearest record of the terms of the Audit engagement essay. ISA provides the contents of an engagement letter to be sent to the client to help prevent misunderstandings with respect to the engagement.
Also, SAS requires that an auditor should agree with the client the terms of the engagement Audit engagement essay be undertaken and the terms should be written therefore the letter of engagement will be required whenever a new auditor appointment is accepted.
The main constituent features of a typical letter of engagement are: The auditor accepted the engagement for the audit of the financial statements after the conclusion that the reporting framework was acceptable.
There was an agreement between the auditor and Maryward Primary School, both parties agreed to meet when changes arise and when the auditor considers the appropriateness of the matter to do so. In preparation for the audit, the auditor had a tour to Maryward Primary School after the opening meeting with the client.
An auditor may tour this area as part of a pre-audit visit to review documents before or after the opening meeting. Planning According to Puttick et al the auditor first considers materiality at the planning stage of the audit. The auditor made a judgement of materiality in order to plan the audit in such a way that sufficient evidence is gathered to draw up a conclusion.
Planning materiality was based on the end of year financial statements and budgets. The auditor also considered inherent risk as it has a direct impact on the nature, timing and extent of procedures the auditor plans to perform to gather sufficient appropriate audit evidence in response to the assessed risk of material misstatement.
The auditor assessed audit risk and inherent risk as it is an essential part of audit planning to help in determining the quality and quantity of evidence gathered and the staff that needed to be assigned to the particular audit. The auditor also obtained an understanding of the business and its environment in order to assess the risk of material misstatement.
The auditor used the knowledge of these risks to determine the appropriate amount of audit evidence gathered. The understanding helped the auditor to evaluate the design and implementation of specific controls that could stop or discover and rectify material misstatements at the assertions level.
Audit risk is the risk that the auditor will unknowingly express inappropriate opinion on the financial statements. Puttick et al quotes the ISA definition of detection risk: The auditor inquired into the detailed working papers, inspected legal documents and minutes of meetings of the accounting system and its related controls from the management and personnel of the client.
A description of the system was recorded and confirmed that the record is an accurate description of the system and a preliminary evaluation of the internal controls was made.
Audit planning involves developing an overall strategy for performing the audit. During planning the auditor established an understanding with the client as to the nature of services to be provided and the responsibilities of each party through the engagement letter.
The auditor developed an overall audit strategy, an audit plan and audit program and documented in the working papers each significant business cycle that is, revenue, expenditure, fixed assets, payroll and accounting.
Planning continued throughout the entire audit as the auditor accumulated sufficient appropriate audit evidence to support the audit opinion. Performing tests of control and Substantive procedures One of the most important of all the audit stages is the process of testing the internal controls.
The aim of tests controls is to obtain evidence that controls on which audit reliance is intended, worked out throughout the period of the financial year under audit. The tests of controls indicated that internal controls are operating effectively; the planned audit approach was not to be changed.
These processes and procedures were used to ensure that proper approvals are in place before payment is made or transactions entered in the system. The auditor used the primary method of internal control testing to randomly select transactions and checked the source documentation. The random selection from a representative sample revealed that controls are strong, so there was no point for increasing the sample size.
A substantive procedure is the actual process of collecting physical evidence of transactions and verifying the value posted to a specific account is supported by actual documents. This aspect of the audit is the most time consuming and is very detailed work. Gray propounds that at this stage conclusion made by the auditor must be supported by in each case by carefully evaluated evidence that the transactions are completely and accurately recorded.
As auditors cannot rely completely on management assertion of completeness, the search for unrecorded expenses and liabilities was designed to yield audit evidence of liabilities that were not recorded in the reporting period.
A material error or fraud in the inventory has a pervasive effect on the financial statement. Auditing standards requires that the auditor should observe the inventory taking and make test control.
Audit Engagement Letter Essay words - 5 pages letter. Responsibilities of the Management Our audit will be conducted on the basis that, management and where appropriate those charged with governance, acknowledge and understand that they have responsibility: (a) for maintaining proper accounting records and preparing financial statements. Audit Engagement Report. Custom Audit Engagement Report Essay Writing Service || Audit Engagement Report Essay samples, help Auditing involves investigating a firm’s activities to reveal if there are any hitches involved in the conduct of the business. Disclaimer: lausannecongress2018.com is an custom paper writing service company that writes custom essay papers, custom dissertation papers, custom term papers, custom thesis papers, custom research papers, project proposals, homework help, assignments, and other custom papers for revision lausannecongress2018.comr, the custom papers may be used when well-referenced.
Physical inventory at year end was counted when the auditor was present to observe and perform the dual direction testing to gather evidence for the existence and completeness assertions. This involved the performance of substantive procedures the nature, timing and extent of which responded appropriately to the assessed risk of misstatement at the assertions level to achieve a level of detection risk that will result in an acceptable level of audit risk relating to assertions within financial statements.
Evaluating and concluding The final stage of auditing process involves evaluating and drawing conclusions on the fair presentation of the financial information and the drafting of the audit report.Audit Engagement Letter Essay words - 5 pages letter.
Responsibilities of the Management Our audit will be conducted on the basis that, management and where appropriate those charged with governance, acknowledge and understand that they have responsibility: (a) for maintaining proper accounting records and preparing financial statements.
Essay Audit Engagement Words | 4 Pages. the board of directors and audit committee will prevent misstatements arising from misappropriation of assets and fraudulent financial reporting.
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Process of Issuing Audit Report Essay. INTRODUCTION A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion. What Is an Audit Engagement? When a company has to go through the audit process, an auditor may use the term "audit engagement." This can mean different things, so it is important that the auditor clarify what he means when he uses the term.
Audit Engagement Report. Custom Audit Engagement Report Essay Writing Service || Audit Engagement Report Essay samples, help Auditing involves investigating a firm’s activities to reveal if there are any hitches involved in the conduct of the business.