Planning and Developing a Financial Statement Audit

Planning and Developing a Financial Statement Audit

Overview:

Your audit team has recently been assigned to an engagement for a brand-new audit client. The objective of this assignment is for your team to complete a semester-based project that incorporates the early stages of an audit engagement from understanding your new client to developing an attestation plan for two significant financial statement accounts. Your team will complete a planning memo and audit program that will then be presented to the audit partners on the engagement (i.e., your classmates). The PCAOB (i.e., your professor) will then be assessing the quality of your memos based on the completeness and accuracy of your audit team’s discussion.

Client Selection:

Your audit team is free to engage with any company that you wish as long as it is publicly traded on a US stock exchange. Note though that client and industry choices will be on a first come, first serve basis. That is, only one client can be represented per industry. Here are some example industries that you may choose from: financial services, manufacturing, healthcare, automotive, technology, retail, media & entertainment, and real estate.

Requirements:

Planning and understanding the client：

1. Business Process Analysis

a. Select one “core business process” and explain how management envisions this core process contributing to the firm’s business objectives.

b. Discuss one sub-process and its objective. Justify why it is audit sensitive.

c. Discuss one process-level risk that threatens the sub-process objective.

d. Discuss one KPI that links to the process-level risk and how management can use the KPI to monitor the risk.

2. Risk Assessment

a. Develop the ARM. Set your audit risk (AR) and assess the risk of material misstatement (IR x CR) and determine detection risk (DR). Use the same categorical assessments we used in class (Low/Moderate/High). Your assessments should be informed based on your strategic and process analyses. For CR, review prior 404 opinions in their 10-K. Justify how and why you determined each risk.

Note: Audit Risk Model (ARM) that we have use categorical assessment we have used in class (which you may refer the AR formular and the ARM analysis model in the powerpoint named “lecture 13- Audit Risk Model”)

(I would like this chart to appear in the essay for analyzing the ARM)

THE MOST IMPORTANT : (Starbucks 10-k annual reporting)

https://s22.q4cdn.com/869488222/files/doc_financials/annual/2018/2018-Annual-Report.pdf