Audit Report

In Unit 4 you will submit a draft of the final project due in Unit 5.

Below you will find some additional information on your project. This is just some tips that I will share in the last few chat sessions but I think it will help you organize your thoughts. For those of you who have not been listening to the chats here is an opportunity to have the tips for the final assignment all in one place. The assignment should not be more than 2000 words – if you have written more than 2000 words then you may have included too much information that may not be relevant to the assignment. Further you should not have more than 1000 words or you may not have enough information. Finally, please note that this is an outline to help you with your assignment and not meant to be inclusive.

Intro (You are providing details about your company to your audit team)

1. Discuss your company in one or two paragraphs.

2. Provide any detail you feel pertinent.

Framework (You are telling your audit team what framework you will use to guide the audit)

1. Discuss briefly the framework that you will use.

2. You can either use the Integrated Framework, General Audit Framework that we discussed in class, or make up your own.

Risk Mitigation (You are informing the audit team of the potential risks to the audit)

1. Risk ie financial reporting

a. Mitigation

2. Risk ie business risk

a. Mitigation

3. Risk ie audit risk

a. Mitigation

*Please note that some people will take a different approach but as long as you address the risk it should be fine.

Accounts or Areas of Focus

1. Accounts i.e. Accounts Receivable (provide information on why you choose this account)

2. Area of focus i.e. Inventory (provide information on why you choose this area)

3. Area of focus i.e. Capital assets (provide information on why you choose this area)

Test and Procedures (List for the audit team the test and procedures – this is the only area that can be outlined with on other explanation)

1. Accounts receivable – Completeness Test/Rights and Obligations – Confirmations

2. Inventory – Completeness Test – Inventory Count

3. Capital Assets – Completeness Test – Reviewing assets to ensure ownership

Sampling (Explain to the audit team the sampling approach that will be used.)

1. Accounts receivable – Statistically sample 20% of the accounts listed in the accounts receivables. Satisfactory response rate would be at least 80% returns

2. Inventory – Review the last independent inventory count and determine if a reconciliation

3. Capital Assets – Judgmentally select one item per quarter for the last year and tie back to purchase records or proof of purchase

Documentation Required (Tell your audit team what type of documentation that the team will be reviewing)

1. Accounts receivable – Accounts receivable register or a list of sales receipts that can then be tied back to receivables and then sampled

2. Inventory – Inventory count performed by a third party, reconciliation of inventory account evidence of adjustments to inventory for any variances

3. Capital Assets – Capital assets register, purchase orders and/or proof of purchase documents

Levels of Assurance (Explain levels of assurance that you can provide to your audit team)

1. Briefly discuss overall assurance

2. In chapters 1 and 2 it details levels of assurance that any auditor can provide – here you are saying the level of assurance that any auditor can provide for any external audit

Internal Controls (Explain Internal Controls to your audit team)

1. Explain how internal controls can impact the overall business

2. List two internal controls such as: 1. Manager Review and approval 2. Reconciliation

Please note that you will submit your draft in Unit 4 and the final in Unit 5.