SEC 10K Paper and Excel Presentation for Caterpillar Inc.
dth850
CaterpillarInc4.pptxCaterpillar Inc. Audit plan
Dax Hale
Audit Theory
UMUC
Introduction
Caterpillar Inc. is an American
It specializes in various activities ranging from building to mining equipment.
Others include the production of fuels from various sources
Focusing on finance, the company is always under scrutiny over its financial operations through various sub functions (Caterpillar inc., 2018).
Auditing is one of the major functions
Auditing ensures that the company is in tandem with various rules and regulations that affect or in more than one way
The purpose of the audit plan
The purpose of audit in Caterpillar Inc. is to give an opinion on:
The financial accounting reporting practices
Usage of accounting standards
Act as the oversight function of financial reporting.
Seeks to establish the compliance and the legal position of the company’s activities
The audit seeks to establish the possible risks that Caterpillar Inc. is likely to face.
Also, the audit seeks to establish and advise on the independence of the auditor (Aobdia, 2017).
Accounting and auditing issues that are likely to be faced
Taking this into perspective, one of the major challenges that are likely to be faced as a new auditor of Caterpillar Inc (Caterpillar inc, 2018).
Another key issue that is likely to be faced when acting as a new auditor of Caterpillar Inc. is the gap between the audit expectation and the audit litigation.
Also, another issue that is likely to be faced is the issue regarding leveraging technology
Risks facing Caterpillar Inc.
To begin with, Caterpillar Inc. faces the risk of plunging oil prices. In this, the company is likely to experience low prices
Another major problem that is likely to be faced is the vulnerability to the forces of microeconomics
The last major risk is the existence of possible currency fluctuations.
How these issues are likely to affect the audit
Oil price plunging can lead to misappropriation of funds meant to settle these expenditures.
Focusing on the issue of fluctuating microeconomics, it is clear that they will affect the audit from the fact that they will lead to various unpredictable inventory balances and movements (Tricker, 2016).
Lastly, the issue of currency fluctuations is likely to affect the auditing of revenues and the cash and cash equivalents.
How these issues can be mitigated.
To start with, regarding the issue of plunging oil prices and its impact of inability to track expenses, the company can do a number of things (Knechel & Salterio, 2016).
For one, the cutoff analysis needs to be done to assess the cutoff of the inventory and how much it has reduced since the time it was sold (Knechel & Salterio, 2016).
Lastly, in order to audit for the changes in price fluctuations and the resulting discrepancies in revenue and cash equivalents, a number of things need to be done
Tricker, R. (2016). ISO 9001: 2015 Audit Procedures. Routledge.
Aobdia, D. (2017). The validity of publicly available measures of audit quality. Evidence from the PCAOB inspection data.
Caterpillar Inc. (2018). 6134916_1 1 caterpillar inc. Charter of the audit committee of the board of directors. Retrieved from http://s7d2.scene7.com/is/content/Caterpillar/CM20180227-46579-03780
Knechel, W. R., & Salterio, S. E. (2016). Auditing: Assurance and risk. Routledge.
