Audit

Audit
Fraud Auditing and Different type of fraud
Introduction
Over the years, the role of auditors become increasingly important especially in a capitalist economy as the process of wealth creation and political
stability depends heavily upon confidence in processes of accountability and how well the expected roles are being fulfilled. An auditor has the
responsibility for the prevention, detection and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing. The
most frequently debated areas amongst auditors, politicians, media, regulators and the public is where the fraud is coming from and by whom. This
disagreement has been especially tinted by the collapse of big corporations like Enron and ... Show more content on Helpwriting.net ...
First, there is an incentive or pressure that provides a reason to commit fraud. Second, there is an opportunity for fraud to be perpetrated (e.g. absence
of controls, ineffective controls, or the ability of management to override controls.) Third, the individuals committing the fraud possess an attitude that
enables them to rationalize the fraud. (http://en.wikipedia.org/wiki/SAS_99)
As we know fraud is more likely to be committed by a single individual, without a prior history of fraud, who often raises a red flag because they are
living beyond their means and are experiencing financial difficulties. The reasons for fraud are not always obvious to the business owner or even their
attorneys. However, what is obvious is that it is often overlooked, ignored, and even undetected.
An Analysis of the Fraud Triangle Abstract
The concept of a "Fraud Triangle" is introduced to the professional literature in SAS No. 99, Consideration of Fraud in a Financial Statement Audit. The
Fraud Triangle consists of three conditions generally present when fraud occurs: Incentive/Pressure, Opportunity, and Attitude/ Rationalizations. Input
from forensic experts, academics and others consistently show that evaluation of information about fraud is enhanced when auditors evaluate in the
context of these three conditions. To examine the impact of the fraud triangle on the audit process, this paper develops an evidential
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Audit Proposal
Audit Proposal
By: Catherine Chase
Instructor: Khatrina Higgs, CPA
ACC/542
Audit Proposal
Abstract
Understanding the audit process and how auditors operate is vital since it informs IT managers how to develop an environment that is compliant. More
importantly, this brief will discuss the role of the auditor and its responsibilities as well as expand on the role and responsibilities of management
during and after the audit. This brief will also focus on the methodologies of how auditors conduct the IT audit process and the specifics that are
involved in performing an audit as well as the responsibilities of management.
Financial Audit vs. IT Audit
The primary objective of a financial statement audit is to ensure that ... Show more content on Helpwriting.net ...
Additionally, AICPA issued SAS No. 90, which requires Auditors conduct open and frank discussions with management and the audit committee
relating to the quality and the acceptability of the organization 's accounting principles as it pertains to its financial statements. These discussion should
generally also include matters relating to the consistency and application of the accounting policies as well as the clarity and completeness of the
financial statements (Reinstein & Houston, n.d.).
The new rules by the SEC 's require audit committees to include a report in the company 's proxy statement that informs shareholders of the committee
's financial oversight responsibilities.
Auditing Around The Computer
The auditing around the computer approach is pragmatic when computer applications are simplex. Moreover, SAS No. 94 doesn't eliminate the use of
this technique, rather, this approach may be well suited for firms using a variety of accounting software that process applications periodically, or where
the audit trail generated is extensive and allows outputs to be referenced back to inputs. However, one of the primary weaknesses of auditing around

the computer is that it is unable to determine whether the program logic is correct, nor does this approach reveal how the automated controls respond
to a wide variety of transactions that contain errors. Therefore, in a complex IT environment, this approach may potentially overlook significant errors
rendering it

Audit
AUDITING THEORY
8.Which of the following should an auditor do when control risk is assessed at the maximum level?
A. Perform fewer substantive tests of details.
B. Perform more tests of controls.
C. Document the assessment.
D. Document the internal control system more extensively.
9.Which of the following is least likely to be a test of a control?
A.Inquiries of appropriate personnel.
B. Inspection of management's engagement letter.
C. Observation of the application of a policy.
D. Reperformance of the application of a policy.
10.Which of the following controls may prevent the failure to bill customers for some shipments?
A. Each shipment should be supported by a prenumbered sales invoice that is accounted for.
B. Each ... Show more content on Helpwriting.net ...
D. Audit evidence provided by original documents is more reliable than audit evidence generated through a system of effective controls.
20.Which of the following statements relating to the appropriateness of audit evidence is always true?
A. Audit evidence gathered by an auditor from outside an enterprise is reliable.
B. Accounting data developed under satisfactory conditions of internal control are more relevant than data developed under unsatisfactory internal
control conditions.
C. Oral representations made by management are not valid evidence.
D. Evidence gathered by auditors must be both valid and relevant to be considered appropriate.
21.An auditor may achieve audit objectives related to particular assertions by

A. Performing analytical procedures.
B. Adhering to a system of quality control.
C. Preparing auditor working papers.
D. Increasing the level of detection risk.
22.Which of the following is the best example of a substantive test?
A. Examining a sample of cash disbursements to test whether expenses have been properly approved.
B. Confirmation of balances of accounts receivable.
C. Comparison of signatures on checks to a list of authorized signers.
D. Flowcharting of the client's cash receipts system.
23.To reduce the risks associated with accepting fax responses to requests for confirmations of accounts receivable, an auditor most likely would
A. Examine the shipping

Taxpayer Audit Program
Examination techniques
A taxpayer audit program must embrace a range of methods and techniques for determining and verifying a taxpayer's income if it is to be an effective
component of a balanced compliance management strategy. Detecting and deterring non–compliance requires biber (2010) more than a mere
examination of a taxpayer's books and records and necessitates an analysis of the taxpayer's financial affairs to correctly assess tax liabilities.
Direct methods, often referred to as specific issue or specific item methods; rely upon verification of income or expenses by direct reference to the
books and records used to prepare the tax declaration. Adjustments to declarations or assessments are supported by specific evidence in relation ... Show
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Using and sharing this information across the organization, tax administrations may better allocate work and identify specialist resources or skills
Improving competency and addressing capability gaps: Responsibility and a accountability for improving auditors, audit managers and audit directors
commonly lies with the staff member in question and their direct manager and/or local management team. Competency improvement should be
integrated (not be seen as extra task) into normal business activities. Together with tax auditing or training departments, human resource departments
(where applicable) often have joint responsibility and be significant contributors to the improvement process

audit proposal
Audit Proposal
Brenda Pina, Rachel Foster, Maria Kight, Christine Twiford, and Clorissa Willie
ACC/542
July 14, 2014
Professor Thomas Cappels
Audit Proposal
There are many different types of audits including internal, external, and information technology. Companies should be familiar with the types of
audits that may possibly be used on an Accounting Information System (AIS). Knowing the different types of audits and where they are used will help
a company be ready for an audit and make the process much smoother. There are some circumstances where auditing through a computer is not always
beneficial. Auditors want to make sure they are completing their audits fully and appropriately to the best of their abilities. ... Show more content on
Helpwriting.net ...
Access controls protect data from being released to non–authorized users, hackers, and other intruders.
How the audits are conducted
Kudler will conduct an information system audit by examining and evaluating their present hardware and software. They will also examine their IT
controls, systems security, risk management, and the adequacy of their current systems. They can carry out their marketing audit by evaluating the
effectiveness of their marketing program and examining its capabilities. It will evaluate their functions in respect to their goals, mission, vision, and
their values of Kudler, which is done externally. Kudler will examine their faculty, and their deficiencies will be identified. Another suggestion is
equipment be audited, the maintenance, and an examination to determine if it's being operated at the designed levels, safety set–up, security, and
access issues. Their audit will be done by an external auditor who will examine their accounts, vouchers to support, financial information tests,
evaluation of their financial statements, and also examine the internal control and make comments for improvements.
Events that prevent reliance on auditing through the computer
Using computer–based accounting systems does have its disadvantages, such as certain laws pertaining to confidentiality, the requirement to protect
against the loss of data through power failures, the

External Audit And Non Audit Services Essay
External Audit and Non–Audit Services
Introduction
An external auditor carry out the audit workпјЊaccording to particular rules or laws of the financial statement corporation, government agencies, other
juridical entity, as well as the independent implementation of the audit commissioned. External audit is actually an important systematic inspection,
which aim at false behavior within the enterprise and deceptive behavior. The advantage of external audit is to ensure the fairness and independence of
the audit. However, the external auditors do not understand the internal organizational structure, production processes and operating characteristics, So
difficulties may arise in the audit of the specific business. Non–audit services refer to other authentication services, consulting services and other
services other than audit services. This essay will discuss whether the provision of non–audit services by external audit firms is advantageous or
disadvantageous, and explain how regulators can reduce the threat posed by such regulations.
Disadvantage and disadvantage There are some advantages of using external audit firm for some non–audit services. The external audit firm can
develop expertise which used in some business areas and specific industries that other form of consultants could not match(Quick and
Warming–Rasmussen, 2009). To provide non–audit services, such as management consulting, can make the firm does not improve the audit resources
investment(Habib, 2012).

Audit Approach
risk
The approach adopted by an audit firm to a specified audit assignment will be a key factor in determining the outcome of the audit. If auditors fail to
adopt the correct audit approach then the likelihood of audit failure increases, failure which could lead to a damaged reputation and potentially costly
litigation against the firm. This article is the first of a series on riskвЂ‘based auditing and audit evidence. AUDIT APPROACHES Essentially there are
four different audit approaches: the substantive procedures approach the balance sheet approach the systems–based approach the risk–based approach.
The substantive procedures approach This is also referred to as the vouching approach or the direct verification approach. In this approach, ... Show
When adopting this approach, in order to
technical
facilitate the identification of risks and the assessment of their effect on the financial statements, risks are categorised as: financial risks – such as cash
flow risks compliance risks – such as breaching of laws and regulations risk operational risks – such as loss of key employee risk and loss of data risk.
Specific use of the business risk approach to an audit will be covered in the second article of this series. The ultimate objective of adopting the
business risk approach is to reduce audit risk – the risk that the auditor will give an inappropriate opinion on the financial statements. Students should
therefore appreciate how business risk is linked to audit risk and how the business risk approach is integral to the use of the audit risk model when
planning audit work. FINANCIAL STATEMENT/DETECTION RISK Students should be aware that audit risk is a function of financial statement risk
(the risk that the financial statements are materially misstated), and detection risk (the risk that the auditor will not detect such misstatements).
Financial statement risk This has two components – inherent risk and control risk. Inherent risk is the susceptibility of an assertion to a misstatement
which could be material (individually or when aggregated with other misstatements), assuming that there were no related internal controls. It is limited
either to the nature of the item in the

Audit Report On Audit Cycle Performance Essay
Introduction
Audit cycle performance consists of several stages and the basic first stages are planning and preliminary survey in order to obtain general
information on all areas and aspects of the audited company as well as the company 's activities and strategies that can be obtained in a short period of
time. To accomplish these stages, some important points is needed including the understanding of the entity, identifying the key areas (key control), set
the objectives and scope of the audit, determine the criteria of the audit, identify the audit evidence, prepare the preliminary survey, organize the
preparation of the detailed test program, collect and test the audit evidence, and lastly generate the audit working papers.
Up to this point, the internal auditor has completed the work of collecting, testing, and documenting the data and information in the form of audit
working papers. The next step is to manage this data in order in the form of audit findings. The findings of this test need to be easily and quickly
understood by the reader to then communicate with the audited entity. Preparing audit findings activity is the final stage of conducting the exam
(detailed audit examination) before entering the stage of reporting.
The findings of the audit can be defined as an area of potential control weakness, policy violation, or another issue that has been identified during the
audit. The findings generally outline a problem that exists, a particular situation that

Audit Program
ABCD 1234 AND COMPANY WLL Corporate Office| To: Head– Procurement & StoresCC: | From : Head – Internal Audit| Report No| Date : |
* Subject: Audit Report on Operations of ABCD 1234 AND COMPANY WLL.
We have done general operations audit of ABCD 1234 AND company WLL from 1.11.2012 to 20.11.2012 and submitting the draftaudit report below..
Executive Summary: * There is no ABC analysis of the suppliers have been done by the company ( Refer finding # 1).
The Purchasing Department has not carried out an ABC analysis for suppliers and articles. As a result purchasing activities are not focusing its
activities on the right suppliers and articles. Local purchases are done with only one supplier and overseas purchases are ... Show more content on
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This usually translates for the volume into: A–suppliers = 10% of purchasing volume; B–suppliers = 15% of purchasing volume and C–suppliers = 75%
of purchasing volume.
ABC Analysis for ABCD 1234 and company WLL
The following table shows the segregation of suppliers in ABC categories as defined above:
Table 6: ABC analysis per supplier (2010–11) (RO '000s) | A–suppliers| B–suppliers| C–suppliers| Total| InternalSuppliers| Number of suppliers| Total| |
| | | | | In %| | | | | | Purchasing value| Total| | | | | | | In %| | | | | ExternalSuppliers| Number of suppliers| Total| | | | | | | In %| | | | | | Purchasing value| Total| |
| | | | | In %| | | | | Total| Number of suppliers| Total| | | | | | | In %| | | | | | Purchasing value| Total| | | | | | | In %| | | | |
Finding – There is no ABC analysis of the suppliers have been done by the company.
The Purchasing Department has not carried out an ABC analysis for suppliers and articles. As a result

Internal Audit Report On The Audit
1. The internal auditors report directly to the CEO and the CEO is the one who decides on the audit plan.
Control Weakness: The CEO sets up all the meetings that take place between the internal auditors and the audit committee and the director of the
internal audit department doesn't have outside access to the audit committee. Although the internal audit department is in charge of giving a presentation
to the audit committee, the CEO must filter everything that is reported (including all documentation). Also, whenever there tends to be questions in
regards to the receiving, processing or manufacturing functions, the CEO just refers the auditors to the Human Resources department, instead of going
into detail on the issues that are raised. ... Show more content on Helpwriting.net ...
This organizational structure is useless and does not allow for effective internal control over financial reporting. The CEO can easily steer the internal
auditors away from key issues. Objectivity of information is compromised because the internal auditors can simply be under pressure to misstate
financial statement account balances.
Recommendation: The internal auditors need to report directly to the Audit Committee, and not the CEO. By doing so, the internal auditors will be
able to work independently outside of management control. This will allow for the internal auditors to exercise due care about issues raised that can be
conflicting with the CEO's agenda. Internal auditors must have direct access to the audit committee so that they are able to report on significant
deficiencies that arise and to be able to address these deficiencies with management. Furthermore, the overall control environment can be improved and
risk assessment can decrease if there is that open communication between the auditors and management. 2.The machine operator's pay is contingent on
the number of spheres that go through helixination.
Fraud Risk: This is a fraud risk because the machine operator's economic incentives can have a drastic influence on the production process. The
operator can push green spheres through the helixination process and still can get paid

The Audit Of Financial Statements
Introduction and Motivation
The audit of financial statements is mandatory for publically listed entities throughout the world. The auditor conducts various tests and based on the
results forms an opinion on the truthfulness and fairness of the financial statements of the company and whether or not they are prepared in accordance
with the financial reporting standards and are free from any material misstatement (Freedman, 2013). The purpose of auditing is to enhance the
confidence of investors and to add credibility to the truthfulness of company 's true financial performance. However, there are some dos ' and don 'ts
that an auditor must take care of. For instance, anything that threatens the independence of the auditor must be avoided as it adversely affects the
truthfulness and objectivity of the opinion formed.
History raised questions about Australian rules concerning the independence of auditors and its role in contributing to the corporate collapse and the
collapse of HIH insurance ltd (Ramsay, 2001). It is believed that if auditors had been objective in formulating their opinion on the statements or
highlighted the risk of going concern of the firms, situation could have been handled better. Possible reason for auditor being unable to detect future
threats here might be lack of independence from the auditing client.
Independence of the auditor from the client means independence of mind and appearance. The five major threats to independence of an auditor include

Audit
Q1 – What is the relationship between the risk assessment process and the collection of audit evidence? The risk assessment process happens at the
very beginning of the engagement and is to determine the level of risk present in the company. The risk assessment phase is when the auditor assess
the client's situation, conducts an independence threat analysis and decides whether to accept the client or not. The risk assessment is influenced by
various factors such as the degree to which external users will rely on the audited statements, the company's financial position (liquidity), the nature of
operations, competence of management and their integiryt, if it is a first time client or not, etc. The riskier the company seems, the lower... Show more
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There are several ways the profession can reduce its legal liability.
1–The accounting profession as a whole may conduct research in auditing in order to come up with better ways to uncover material misstatements,
fraud, errors, etc. Research is very important to keep the profession up to date with the fast changing business world.
2–The CICA set standards and rules and revise them to fit the constantly changing need of auditing.
3–Professional accounting associations can help protect public accountants by setting requirements.
4–The periodic examination of a firm's practices and procedures is a way to educate practitioners and identify firms not meeting the standards of the
profession.
5–Defend unjustified lawsuit. It is important that public accounting firms continue to oppose unwarranted lawsuits even if in the short run the costs of
winning exceeds the cost of settling.
6–Educate users. It is important that users understand that the auditor's opinion is not a 100% guarantee of the accuracy of the financial statements.
7–Sanction members for improper conduct and performance. The profession is responsible for policing its own membership.
8–Lobby for changes in law to protect the risk exposure and keep insurance. (Arens et al. p.89)
Q5
a)What number is the CAS for audit documentation?
CAS 230
b)How many sections are there to each CAS, name them?
5 – Introduction, Objective, Definitions, Requirements,

Audit Engagment Letter
Running head: Beginning the Audit Report
Beginning the Audit Report
Gina Taylor Auditing ACC/546
Selina Ashworth
August 20, 2012
AUDIT ENGAGEMENT LETTER
August 20, 2012
Larry Lancaster
Apollo Shoes
10253 W. Higgins Rd. Ste 600
Rosemont, IL 60018
Dear Mr. Lancaster:
This letter is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide.
Services
We will audit the financial statements of Apollo Shoes as of December 31, 2011, and for the year then ending. We will also audit management's
assertion about the effectiveness of internal control over financial reporting at December 31, 2011. Upon completion of our audits, we will provide you
with our ... Show more content on Helpwriting.net ...
Our responsibility as an auditor is limited to the period covered by our audit and does not extend to any later periods of which we are not engaged as
auditors.

Our audit will include obtaining an understanding of your internal controls sufficient to plan the audit and to determine the nature, timing, and extent
of audit procedures to be performed. An audit is not designed to provide assurance on internal controls or to identify reportable conditions, that is,
significant deficiencies or material weaknesses in the design or operation of internal control. Accordingly, we have no responsibility to identify and
communicate significant deficiencies or material weaknesses in your internal controls as part of this engagement, and our engagement cannot be
relied upon to disclose the same. However, during the audit, if we become aware of such reportable conditions, we will communicate them to you.
Prior to preparation and execution of this engagement letter, we discussed with you the fact that we provide clients with services specifically focused
on identifying and addressing weaknesses in internal controls, and on searching for the existence of fraud within your company. We further explained
the additional costs associated with such different levels of service. After consideration of such services, you have informed us that you wish to retain
us to perform only the audit services described in this

Audit Planning And The Audit
Audit planning is a process that entails designing a road map to be followed when conducting an audit. It also extends to identifying the specific
guidelines to be adhered to direct the audit direction in the most professionally way. It can be established that are various guidelines that guide the audit
depending on whether it is internal or external. Notably, external audit is guided by various standards, which require financial information to be
prepared in a specific way as stipulated by various standard setting bodies. Therefore, in audit planning each body has distinct guidelines to be followed
in accordance to the jurisdiction's accepted accounting principles. An analysis of three audit–planning standards: AICPA (American Institute of
Certified Public Accountants), PCAOB (Public Company Accounting Oversight Board) and IAASB (International Auditing and Assurance Standards
Board)reveals characteristic similarities and differences, which have an overall impact on the performance of the audit. Audit planning is carried in
accordance with the guidelines of the specific accounting body. Therefore, in doing so, the Auditor need to identify the jurisdiction under which a firm
falls under to establish which standards to adopt. According to PCAOB, an audit planning should be done in accordance to PCAOB standards
(Auditing Standard No. 9). Furthermore, the standard also expressly defines the how the overall audit plan should be done and the risk assessment
guidelines to be

The Financial Audit Of The World 's Financial Audits
The majority of the world's financial audits are dominated by four major audit firms, which are known as the "Big 4" (PricewaterhouseCoopers, Ernst
& Young, KPMG, and Deloitte). Prior studies suggest that these firms, on average, provide higher quality audit services and also exhibit a fee premium
in comparison with their non–Big 4 audit firms; however, it is questionable that whether all these Big 4 audit firms are the same and that whether there
are differences in audit quality within the Big 4.
In term of total audit fee dollars, PwC maintains its leadership position among the Big 4 (Appendix A, table 1), followed by Deloitte, Ernst & Young
and KPMG. In 2014, PwC generated $15 billion from its audit service – 44% more than those earned by KPMG. PwC also ranked as the most
prestigious accounting firm (Appendix A, table 2) in 2015 according to the Vault's annual Accounting Survey as reported in table 2, followed by Ernst
& Young, Deloitte and KPMG. Following qualitative responses are also taken during the Vault's survey to describe their perception of firms other than
their own: "Most prestigious of the Big 4" "Very aggressive firm but over–promises in the marketplace" "Doesn't seem to care about audit anymore"
"Overworking employees beyond every other firm" "Not a good work/life balance" "Big 3's kid brother" "Least prestigious of the Big 4". These
responses indicate potential variations within the Big 4 firms based on the outside perception of a firm.
In this study, I

Audit Activity, Audit, And Agency Theory
Abstract
Based on a number of researches conducted by the prior papers about audit activity, audit price and agency theory. This short paper will provide a
brief review focus on whether agency theory provides a general framework for audit pricing majorly refer to the study by Nikkinen and Sahlstron
(2004). Furthermore, this is short paper also try to make further discussion from personal perspective.
Literature review
The purpose of Nikkinen and Sahlstron (2004) study is to 'investigate whether agency theory provides a general framework for audit pricing.' Through
analysing audit price in seven countries representing entirely different accounting and economics environment, they try to verify the hypothesis that
audit fees are determined by agency theory (Nikkinen and Sahlstron, 2004). As suggested by the regression analysis, it confirms that there is a
negative relationship between audit fees and manager ownership and a positive relationship between audit fees and free cash flow in several countries
(Nikkinen and Sahlstron, 2004). As the overall R2is 0.78, which is suggested that agency theory can be used, at least to some extent, to explain audit
fee (Nikkinen and Sahlstron, 2004)
Discussion
According to Jensen and Meckling (1976), agency theory derives from the financial economics literature, which postulate that firm consist of a nexus
of contracts between the owners of the entities (the principles) and manager (the agents) who are charged with using and controlling

The Role of Audit
The Role of Audit An audit is 'an independent examination of, and the subsequent expression of opinion on, the financial statements of an organization'
(Hussey, 1999, p. 33). The audit can be viewed as an integral part of corporate financial reporting, where the assurance it provides stems from the trust
placed in the judgement of the auditor. The audit is designed to demonstrate 'the completeness, accuracy and validity of transactions which, when
aggregated, make up the financial statements' (Power, 1997, p. 24).
An audit is 'an independent examination of, and the subsequent expression of opinion on the financial statements of an organization'. (Hussey 1999).
"There has to be an explanation of why auditors do what they do ,what ... Show more content on Helpwriting.net ...
The auditors work should also be free from fraud and error and exists through proper and exists through recognized concepts and frameworks so that
there is a consistency in the reporting which ultimately leads to a fair presentation.
It could be said that the postulates and concepts are ideas to guide the performance of the audit function rather than the theory of its existence.
There are also other theories for example the market based approach which suggests that auditing is a n economic function. The market based approach
of auditing uses the agency theory, information theory and the financial economic concept which provides a theoretical framework for viewing an
audit function. The market based theory also suggest that the audits are not only demanded by consumers but also valued (i.e. the perceived benefit >
perceived costs) if not the resources used for the audits would be shifted towards other products.
There are also 3 complementary hypothesis's namely the stewardship(monitoring ) hypothesis , information hypothesis and the insurance hypothesis.
The stewardship hypothesis delves into the agency relationship rational expectations. Under this hypothesis it expects asymmetric information as a
result of the separation of ownership and control and it also could be said that the principals and the agents interest to diverge from each other. As a
result it could be said that the audit provides the stewardship between the principal and the agent and provides the

Information Technology Audit
INFORMATION SYSTEMS AUDIT
Introduction An information technology audit, or information systems audit, is an examination of the controls within an Information technology (IT)
infrastructure. IT auditing is a branch of general auditing concerned with governance (control) of information and communications technologies
(computers). IT auditors primarily study computer systems and networks from the point of view of examining the effectiveness of their technical and
procedural controls to minimise risks. IT audits are also known as automated data processing (ADP) audits and computer audits or IS, IT or ICT
auditing and systems auditing. They were formerly called electronic data processing (EDP) audits History of IS Audit The concept of IT ... Show more
Some industry bodies define their own generic information security related standards too e.g. SAS 70 and PCI DSS for financial services
2 Compiled by: Mr.Avadh Yadav,Bos,Noida
Governments and legislatures define standards in the forms of laws and regulations e.g. for electronic signatures, copyright, privacy & governance.
Steps in Information Technology Audit Different audit organizations go about IT auditing in different ways and individual auditors have their own
favourite ways of working. It can be categorized into six stages:
3
Compiled by: Mr.Avadh Yadav,Bos,Noida
1. Scoping and pre–audit survey – the auditors determine the main area/s of focus and any areas that are explicitly out–of–scope, based normally on
some form of risk–based assessment. Information sources at this stage include background reading and web browsing, previous audit reports, pre audit
interview, observations and, sometimes, subjective impressions that simply deserve further investigation. 2. Planning and preparation – during which
the scope is broken down into greater levels of detail, usually involving the generation of an audit work plan or risk–control–matrix. 3. Fieldwork –

gathering evidence by interviewing staff and

The Ethics Of The Audit
As the wide–ranging business environment goes down, the rate of auditor litigation has increased. Lawsuits are a continuous threat to the auditing line
of work. In this paper, we present evidence on lawsuits having a positive effect on auditors audit liabilities. It is the auditors' responsibility to plan and
complete the audit to obtain practical guarantee about if the financial statements are free of material misstatement or if they are caused by error or
fraud. A mixture of court decisions and economic state of affairs has shaped the legal setting for theauditing line of work and the resulting lawsuits.
Even though auditors are potentially legally responsible for both criminal and civil offenses; lawsuits have encouraged auditors to reduce their risks of
legal action by instituting sound quality control and look at procedures. The majority of the time, for litigation to arise, the auditor must have given an
unqualified audit opinion to a set of financial statements that are afterward revealed to have material misstatements or material omissions. According to
the ACCA an auditor liability is increasingly concerning, both in terms of audit quality and the reputation of the profession but also in terms of the cost
to the industry and the barriers this creates to competition within the audit market.
Auditors are potentially liable for both criminal and civil offenses. Criminal offenses occur when individuals or organizations violate a government
imposed law. Auditors

Corporate Audit Questions
INSTRUCTIONS:
1. Please read all instructions and questions carefully before responding. 2. There are ___ points available on this exam, allocated as follows:
________ multiple choice/true–false questions (__ points), _____ short answer questions (__ points) and _____ essay questions (__ points). 3. Keep
track of the time remaining to complete the exam and allocate that time wisely. Do not devote disproportionate time to any one question or section. 4.
GOOD LUCK!
MULTIPLE CHOICE/TRUE–FALSE QUESTIONS
For each question, please select the best answer. Clearly mark your selection (A, B, C, D or E, as applicable) on the accompanying Scantron form. If
more than one letter (or no letter) is selected for a particular ... Show more content on Helpwriting.net ...
sampling
C. substantive testing of account balances
D. interviews
12. A CPA firm is not considered independent when it performs which of the following services for a publicly tradedaudit client?
A. tax return preparation as approved by the board of directors B. basic accounting recordkeeping and financial statement preparation C. accounting
information design and implementation D. Both B and C
E. None of the above
13. *Which of the following statements regarding materiality is true?
A. It is more important as an audit planning tool than as an audit evaluation tool. B. Qualitative considerations relating to an item's materiality are less
important than quantitative considerations. C. Quantitative considerations relating to an item's materiality are less important than qualitative
considerations. D. In determining materiality, an auditor should understand who the potential users of the information are and the types of judgments
made by those users when relying on financial information.

14. *If control risk is 1.00, inherent risk is .50, and audit risk is .01, what is detection risk per the audit risk model?
A. .005
B. .02
C. .01
D. .05
15. Positive assurance
A. is required for audit opinions.
B. requires that evidence be gathered and evaluated.
C. is always desired by clients and users of financial information. D. All of the above E. A and B only
16. *A material weakness in internal control
A. may not

Critique Paper on Completing the Audit and Post-Audit...
2013
Antonio, Mark Earl Angelo P.
ACT162 – B74
3/3/2013
2013
Antonio, Mark Earl Angelo P.
ACT162 – B74
3/3/2013
Critique Paper #03: Completing the Audit and Post–Audit Responsibilities
Critique Paper #03: Completing the Audit and Post–Audit Responsibilities
Summary The first article of Moez Bennouri, entitled "Does Auditors' Reputation 'Discourage' Related Party Transactions? The French Case" studies
the relationship between the frequency of RPTs and the external auditors' reputation. Regulators, standard setters and market participants consider
related party transactions a major problem in financial markets. The quality of external auditing may be proposed as an important governance mechanism
to alleviate the propensity of ... Show more content on Helpwriting.net ...
However, for someone is not having this study as their major subject, it would be hard to comprehend. The author might want to use a language that
will be understood by the general audience. There are a lot of articles which are able to discuss their points well, though difficult, because they are
using words that are of common parlance. Nevertheless, the arguments are well said. Each argument raised by the auditor is supplemented by findings
from prior researches which enhances the reliability of such.
This study has attempted to examine the linkages among corporate governance components by taking the case of external auditors' reliance on internal
audit work in developing country's setting of Ethiopia. It aimed to determine the level of external auditors' reliance on internal audit work and identify
key factors that determine the extent of this reliance. The author used a purposive sampling in determining the sample to interview for this study.
Questionnaires were distributed to two groups of external auditors in Ethiopia: those working in a corporate governance environment of private
companies and those in state–owned enterprises' corporate governance settings. The results showed that internal–external audit interactions in Ethiopia
may not be driven by external audit efficiency motives. External auditors' perceptions of internal auditors' work performance are significantly
associated with external auditors' level of reliance on internal

Audit And Investigation Essay
Audit & Investigation
AQ002–3.5–2–AINV–T
15–Jun–12
WASEED AHMED
LECTURER: MR. MEGAT ABDULLAH MEGAT MAHMUD
Table of Contents Different roles of internal and external auditors.4 Internal auditors:4 External auditors:4 Identify the benefits in forming an audit
committee.6 Evaluate the strengths and weaknesses of MPL's control environment:7 Control Environment:7 a.Integrity and Ethical Values:7
b.Participation of Board of Directors or Audit Committee:7 c.Management Philosophies and Operating Style:7 d.Organisation Structure:8 e.Assignment
of Authority and Responsibility:8 f.Human Resource Policies and ... Show more content on Helpwriting.net ...
These factors include: a. Integrity and Ethical Values:
The entity should ensure, honest, legal and ethical act. There should also be code of conduct mentioning how to behave during work, not to cheat or
steal but if it happens then strong action would be taken.
b. Participation of Board of Directors or Audit Committee:
Top management should participate or involve in every case. Frequent meetings and discussions with employees should be held. These meetings can be
held with accounting officers, internal auditors and even external auditors.
c. Management Philosophies and Operating Style:
Philosophy of management can be a nature of business in accepting risks. Operating style can be shown by attitudes and actions toward financial
reporting which include disputes over application of accounting policies.
d. Organisation Structure:
The framework in which an organisation arranges its lines of authority and communications, and allocates rights and duties is organisational structure.
In this, the roles and power is divided among management. Everyone in management should inform to their immediate senior level of management so
that the structure will work accordingly.

e. Assignment of Authority and Responsibility:
Responsibility and authority should be given to those who are capable, in respect to data processing and accounting functions with the required skill
levels relative to

Audit Committee Characteristics
THE ASSOCIATION BETWEEN AUDIT COMMITTEE CHARACTERISTICS AND FINANCIAL RESTATEMENTS
ABSTRACT:
The second section focuses on the background of corporate governance provisions such as the Blue Ribbon Committee (BRC) and Sarbanes Oxley
(SOX) that aim to improve the effectiveness of audit committees. The composition of audit committees is heavily critiqued with an emphasis on
independence, financial expertise and frequency of meetings. This paper will examine each of these characteristics in depth in section 3 and their
effect on financial restatements. Furthermore, this literature review will show that if audit committees can exhibit these behaviors and attributes the
risk of restatements and fraudulent financial reporting will be ... Show more content on Helpwriting.net ...
Audit Committee Independence
The primary responsibility of the audit committee is to serve as an independent and objective body to monitor a company's financial reporting process
and internal control system (BRC, 1999). In order to properly serve one's role as an independent audit committee member, one must be free from all
personal connections and/or material financial connections to the company or the company's key executives (Persons, 2009, peer reviewed). A typical
expectation of audit committee effectiveness is that independent audit committee members or directors would warrant a lower likelihood of financial
restatements. This expectation is supported through prior investigation of empirical evidence (Abbott et al., 2000, peer reviewed; Beasley et al., 2000,
peer reviewed). Specifically, Abbott et al (2004, peer reviewed) and Persons (2009, peer reviewed) both find a negative correlation between audit
committee independence and the likelihood of financial reporting restatement. These studies support the idea that an independent audit committee
contributes positively to the quality of financial reporting and effective monitoring of internal controls.
Scholars such as Abbott, Beasley and Persons, support the solution that the presence of non–independent inside directors on the board greatly increases
the probability of accounting fraud. Monas (2003,

Investigating The Pricing Of Audit
Researches about audit pricing started in the 1980s with the publishing of Simunic (1980)'s The pricing of audit services: Theory and evidence. He set
out the multiple regression model of audit pricing and run the regression analysis using data from 397 listed companies in USA. Simunic took the
position that "audit fees are determined by the loss exposure of the client comlany, the apportionment rate of loss between the audit firm and the client
company, and the production function and characteristics of the audit firm". The results of his study demonstrate that the scale of an auditee is the
most significant factor determining its audit fees, despite other factors, such as the ratio of receivables to total assets of the client company and ... Show
All of the researches mentioned above focus on developed economies, where audit markets have similar characteristics: audit markets are mature and
oligopolistic; audit markets operate under stable policy and regulation. However, things might be different in China, a developing economy, due to the
imperfect regulation and a highly competitive audit market, where top ten audit firms are only in charge of 30% listed companies during 2005–2007,
while big 8 audit firms dominated the audit market in developed economies in the same period (Li et al., 2005; Wang et al., 2008).
Most empirical studies of audit fees have come out due to government's requirement of Chinese listed companies to disclose audit fees in their financial
reports, since 2001. Some works investigate the determinants of audit fees directly. Wang (2002) became the first researcher to study audit pricing
determinants of Chinese listed companies. He concludes that the scale of client firm and auditor, the complexity of client firm, audit opinion, audit
risk, and the industry of client firms are of statistically significance in determining audit fees. Liu et al. (2003)'s research further concludes that the
location of client firm is significantly related to audit fees. Wu (2003)'s contribution is that there is a positive relationship between the changing of
audit opinions (basically from unqualified opinion to qualified

Audit Committee
Accounting Horizons Vol. 21, No. 2 June 2007 pp. 165–187
Auditor Communications with the Audit Committee and the Board of Directors: Policy Recommendations and Opportunities for Future Research
Jeffrey Cohen, Lisa Milici Gaynor, Ganesh Krishnamoorthy, and Arnold M. Wright
SYNOPSIS: To contribute to the Public Company Accounting Oversight Board (PCAOB) project on auditor communications withaudit committees and
boards of directors, we present in this paper a review of relevant academic literature. We also identify promising future research opportunities for the
academic community. We speciп¬Ѓcally focus on how the communication process may affect overall п¬Ѓnancial reporting quality, internal controls,
control environments, and external ... Show more content on Helpwriting.net ...
We present a summary of these implications in Table 1. The literature review primarily features research published in academic accounting andauditing
journals. In an effort to capture the latest research available–as well as research on emerging topics, such as many of those precipitated by the passage
of SOX–we also include working papers submitted to major archiving services. We searched electronic databases such as Ingenta, ABI/Inform, and
American Accounting Association (AAA) Electronic Publications using keywords or combinations of keywords related to the various topics and
subtopics discussed in this paper. We also searched Social Science Research Network (SSRN) and scholar.google.com to identify relevant working
papers. Working papers were included on the basis of the relevance of the research to the audit communication process and on the assessed reliability
of the results and implications. The overall objective is to ensure that the information provided is as relevant, complete, and reliable as possible.
I
1
2
For example, Section 202 of SOX requires that the audit committee pre–approve all services that the external auditor will provide, while Section 204,
among other things, requires that the external auditor communicate to the audit committee on a timely basis such matters as critical accounting
policies and practices. To facilitate the development of

Audit Methodology For A Audit Essay
Audit methodology
The audit methodology will be used as a step by step guideline that will be used by the auditors to keep track of their progress and enable them to
ensure that quality standards are maintained during the auditing phase.
To audit the International Bank of Africa information system we will go through five phases or steps.
Step one: Planning
The first phase will determine the sort of audit team that will be assembled. The team selected will be best placed to handle all obstacles and perform
a detailed audit of the system as accurately as possible. Apart from this the team of experts will go through all the banking operations, operations,
policies, practices and the information system and internal controls. The system to be audited is fairly big as it is an ERP and performs various
operations like financial transactions, customer relationship management, risk management and human resource management. Therefore the team will
consist of finance experts, accountants, and other IT and technical staff. We'll then construct an audit timetable that meets your requirements.
Step two: Risk assessment
The purpose of the risk assessment is to:
Understand the risks that the organisation face in achieving its strategic objectives
Identify the banks keys processes that mitigate risks
The Risk assessment will be carried out to determine that the Bank and its information system are protected from any event that would exploit them
and have a negative impact on the

Case Study Audit
Case Study 3 a) What events or condition above may cause substantial doubt about the entity's ability to continue as a going concern?
Events or condition that may cause substantial doubt about the entity's ability to continue as a going concern are the first one, because of the high
competition in the industry, it has affected the sales of the Fast Go. The effect of vigorous competition in the markets has makes it difficult for Fast
Go to attract and retain customers and to grow their customer base and revenue. Furthermore, many competitors of Fast Go's are larger and have
greater financial resources, less average, and their coverage are more extensive.
Furthermore, Fast Go also suffer high turnover of staff of the company. It is ... Show more content on Helpwriting.net ...
f) What types of audit report will you issue for Fast Go.
Types of audit report that will be issue for Fast Go is unmodified audit report which have to prepare by the management on the going basis after
considering all the mitigating factors that arise.
Case Study 4
i) Explain the factors that contribute to the success of Mazlan's fraudulent scheme. You may explain from the perspective of fraud diamond.
Based on the fraud diamond, the factors that contribute to the success of Mazlan's fraudulent scheme are: a) An incentive – It is an incentive for
Mazlan to commit fraud when he need to bear the limit credit card and he was on the verge of declaring bankruptcy. Because of this he decided to
"borrow" money from IOPSB. b) Rationalization – Mazlan think what he did is rational because he will try to keep track of the money so he could
pay it back later to the company. c) Opportunity– Mazlan has an opportunity to commit fraud when Zairi, the Chief Executive Officer did not play his
duty as an officer. He just signed whatever cheques without check the payment is made for whom. d) Capability– Mazlan was also capable to commit
fraud because he is Account Executive in that company. So that, it easier for Mazlan to "borrow" the money from IOPSB.
ii) Based on what Mazlan told you about his fraudulent scheme, describe

Planning An Audit And Audit Essay
1.Planning an audit is one the most important phase in an audit because without enough planning programme, the auditor risks taking the work blindly
which increases audit risks which will lead to forming an informed opinion on the financial statements. There are many areas in audit planning that will
themselves lead to misunderstanding or misrepresentation and many auditors have fallen under criticism for lack of proper planning documentation. It
is from the filed documentation that inspectors can conclude that file documentation reflects the real amount of planning done.
The auditor will be able to have abroad view of the business at this initial stage, planning. It is from this understanding or knowledge that enables the
auditor to work out a work plan. This understanding gives direction in areas to focus on which in turn influence the opinion given depending on the fair
presentation of the areas focused. The information at the planning stage is also important in determining the level of cooperation by the client.
In audit of Elementary Plc group, the audit risks from the information provided will be on gathering substantial information on the entire company
considering it has subsidiaries. The main challenge is that audits of the subsidiaries are carried out by other independent auditors. Establishing the
amount of work that the subsidiary auditors have done will mean inspecting all their work. While Tomos, the chief financial officer has resigned on
personal grounds,

Audit Analysis : Audit And Audit
Introduction In the early days of independence the audit, audit methods are for the detailed audit approach which is using the accounting books of the
audited entity to verify case by case basis, and for the purpose of exposing the wrong check fraud; With the expansion of enterprise scale and complex
business activities, audit sampling appears that, according to accounting statements balance and accounting data sample extraction section, and then
inferring the overall result of the review. This approach will be inevitably sweeping; recently, there was not only reveals the compliance of accounting
standards and disclosure errors and fraud dual audit mode, which means gradually expanding the scope of responsibility of the audit, but also ... Show
Each set of risk is multifactorial, and as a part of any mistakes will increase the final audit risk.
Ethics Analysis Corporate governance is a key factor, which must maintain a high degree of independence in order to effectively monitor managers.
However, due to fragmentation and instability in equity, the general shareholders could not unite on the implementation of effective public reading to
enable shareholders to senior management for monitoring efforts greatly reduced the formation of a "weak shareholders, strong management"
phenomenon. In many cases, the board of management was influenced and controlled by the corporate governance. The lack of independence of the
board and directors are not independent both become a problem in a number of listed companies in the United States at present. To be more specific,
serious Fraud audit units were illegal but also a source of aggravation of audit risk. AICPA under the "auditor responsibilities of the Committee"
recommends: "Independent auditors should consider measures to prevent customer fraud control the appropriateness of, and has the responsibility to
look for fraud and asked to reveal who usually practice with due care can be fraud uncovered. "This shows that the responsibility of the audit have
been from a single violation of public disclosure of accounting standards evolved into both reveal errors and fraud, and breach of public

Audit Checklist
Appendix D
Checklist for Review of Attestation Engagements Performed by the Office of Inspector General
This Appendix includes guidance for reviewing the Office of Inspector General's (OIG's) attestation engagements conducted in accordance with
Government Auditing Standards (GAS), Chapter 6, and the American Institute of Certified Public Accountants' (AICPA's) Statements on Standards for
Attestation Engagements (SSAE). When an auditor conducts an attestation engagement under generally accepted government auditing standards
(GAGAS), the engagement must be conducted in accordance with the SSAEs and additional GAGAS standards. This appendix is not intended to
replace auditor judgment, and while comprehensive, the peer review team may ... Show more content on Helpwriting.net ...
(GAS, 3.09) | | | | |
|If specialists were used, did the attest team assess their | | | | |
|independence? If impairments were identified, did the attest team | | | | |
|decline to use their work? (GAS, 3.05) | | | | |
|Did the OIG determine that auditors assigned to the attest team are | | | | |
|free of impairments to external independence in both fact and | | | | |
|appearance? (GAS, 3.10) | | | | |
|Did the OIG determine that it is free of impairments to | | | | |
|organizational independence in both fact and appearance? (GAS, 3.12 –| | | | |

Audit Fee
The current issue and full text archive of this journal is available at www.emeraldinsight.com/0268–6902.htm Past control risk and current audit fees
Past control risk
Thomas G. Calderon, Li Wang and Thomas Klenotic
George W. Daverio School of Accountancy, The University of Akron,
Akron, Ohio, USA
693
Abstract
Purpose – The authors posit that audit fees are driven by historical risk factors and risk encountered in the current period. The purpose of this paper is
to focus on historical risk by examining the incremental effect of material weakness in internal control (MW) identiп¬Ѓed in prior periods on current
audit fees, after current risk factors are controlled for.
Design/methodology/approach – The paper uses ... Show more content on Helpwriting.net ...
Increased engagement effort due to high risk in ICFR can be passed along to clients through audit fees. In addition, audit tests cannot uncover all
possible material misstatements; as a result, auditors may add a risk premium to audit fees for risky clients.
Such risk premiums, which compensate the auditors for potential losses associated with high–risk clients, go beyond the incremental fees the auditors
may charge for increased audit effort.
Although studies prior to SOX yield mixed results (O'Keefe et al., 1994; Felix et al.,
2001), recent studies have found supporting evidence of a contemporaneous positive relationship between current control risk and current audit fees by
using ICDs disclosures under SOX (Raghunadan and Rama, 2006; Hoitash et al., 2008; Hogan and
Wilkins, 2008; Bedard et al., 2008). Nevertheless, prior studies have not addressed whether control risk identiп¬Ѓed in prior periods affects current
period audit fees. This is an important question as generally accepted auditing standards require the auditor to assess the effects of prior ICFR
deп¬Ѓciencies on current period audit procedures and risk assessment. In practice, auditors rely heavily on past audit results in audit planning for the
current period. Thus, past

Project Audit : The Audit
As noted by Meredith and Mantel (2012) "The audit life cycle includes audit initiation, project baseline deп¬Ѓnition, establishing a database,
preliminary project analysis, report preparation, and termination" (p. 539). We are going to define what happens in each stage of the audit life cycle:
1.Project audit initiation: This step defines the purpose and the scope of the audit, determines the proper audit methodology to use.
2.Project baseline definition: This step will determine which areas of the project will be audited. It will establish the standards for which to measure the
area on. Verify that the performance established by management is meeting expectations.
3.Establishing an audit database: After the audit has started and the ... Show more content on Helpwriting.net ...
Before the report is released to other members, the auditor will present the findings to the PM so they can be prepared and not blindsided during the
presentation. As the authors mentioned this audit is to help improve the process in the project not to find someone to blame for faults.
5.Audit report preparation: This stage of the audit life cycle will take the information from the preliminary analysis and prepare the audit report. The
report will be made to whatever format the organization agreed upon. Besides the findings in the audit, there will be recommendations and a plan to
implement the recommendations in the report to use on the project. Before the recommendations are published they will need to be verified an
approved by management.
6.Project audit termination: When the project ends, the audit process itself will end after it has finished the last task. There will be a final report
generated and a review of the audit process will be done. The review of the audit process is to look for improvements in the audit and how it was
conducted for future use.
32.List and brieп¬‚y describe the ways projects may be terminated.
There were four different methods of termination described by Meredith and Mantel (2012). Termination by extinction, addition, integration, and
starvation. We are going to briefly describe each of the termination methods.
1.Termination by Extinction: This

Audit And It Audit Industry Terms
Spring 2016 CIS 584 ISHAN FAFADIA
Prof. Wasley HW 1: AUDIT AND IT AUDIT INDUSTRY TERMS 04/13/2016
1. Financial (Substantive) Audit: A financial audit is an independent, objective assessment of an organization 's financial reports and financial reporting
forms. The primary purpose for financial audits is to give regulators, stakeholders, administrators, and managers rational assurance that financial
statements are precise and complete. The purpose of a financial statement audit is to add believability to the reported budgetary position and execution
of a business. The Securities and Exchange Commission ... Show more content on Helpwriting.net ...
The essential destinations of an IT review include:
Assess the frameworks and procedures set up that safe organization information.
Decide dangers to an organization 's data resources, and recognize techniques to minimize those dangers.
Guarantee data administration procedures are in consistence with IT–particular laws, approaches and models.
Decide inefficiencies in IT frameworks and related administration.
3. Audit Scope: The scope and objectives for every audit are determined through discussion with the division 's management and a department specific
risk evaluation. While each audit is exclusive, there are some common objectives applied to maximum audits. Some of the common objectives are:
Review action for the most current twelve–month period.
Review flexible, self–financing, restricted and organization account expenditures and determine if they are usable, reasonable and in compliance with
Academy policies and donor restrictions
Determine if gifts are placed into proper accounts, properly restricted and advanced to the Office of Institutional Advancement.
4. SAS 1: This statement portrays the obligations and elements of the free inspector. The area likewise incorporates refinement between the obligations
of the evaluator and administration and the expert capabilities required by

A Critical View of the Audit Expectation Gap and Audit...
Audit Expectation Gap & Audit Rotation
A Critical View
Auditing is one of the most critical fields where the external auditors are always subjected to criticism and legal regulations which are mostly directed
against them. Mostly this criticism arises because of lack of sufficient understanding of how the company law and auditing standards work and also due
to related misconception about the actual role of an auditor (Porter, 1993). This lack of understanding is called expectation gap where the outcomes of
the audit expected and its actual purpose varies. One solution to this fundamental issue is to reduce this expectation gap by providing a clear definition
of auditor's role and also the audit function that is required to be performed by him. However, during this defining phase, it is necessary to consider
whether an audit rotation would reduce this audit expectation gap.
This term, 'Audit Expectation Gap' was coined by Liggio in 1974. It was established as the perceived difference between the desired performance
levels as observed by the independent auditor and by the user of financial statements (Liggio, 1974, p.2). Tweedie further elaborated this predicament
by saying, 'The public appears to require (1) a burglar alarm system (protection against fraud).....(2) a radar station (early warning of future
insolvency).....(3) a safety net (general re–assurance of financial well–being).....(4) an independent auditor (safeguards for auditor independence).....and
(5)

Audit Report
Independent Auditor 's Report
To the Stockholders
Apollo Shoes, Inc.
1235 Winner 's Road
Write City, IN 12354
LCC has conducted an audit of Apollo Shoes, Inc. balance sheets, the retained earnings, cash flows, and other related statements of income for the year
ended December 31, 2006/2007. Apollo Shoes Inc management is responsible for maintaining the effective internal controls that goes along with the
financial statements and how well the accuracy is going to be. LLC has evaluated the effectiveness of the said controls and with everything to see the
relevance in the timing, the substantive in quality, and the comprehensive in nature. The responsibility of our firm is to express an opinion that is
supported by audit evidence in ... Show more content on Helpwriting.net ...
1235 Winner 's Road Write City, IN 12354 DONALDSON AND LUCIER, LCC has conducted an audit of Apollo Shoes, Inc. balance sheets, the
retained earnings, cash flows, and other related statements of income for the year ended December 31, 2006/2007. Apollo Shoes Inc management is
responsible for maintaining the effective internal controls that goes along with the financial statements and how well the accuracy is going to be.
Donaldson and lucier, LLC has evaluated the effectiveness of the said controls and with everything to see the relevance in the timing, the substantive in
quality, and the comprehensive in nature. The responsibility of our firm is to express an opinion that is supported by audit evidence in regards to the
accuracy of the Apollo Shoes, Inc. financial statements. Our firm has conducted all audit related services that is accepted by the United States and the
generally accepted auditing standards. The planning and performance done ensures that the audit was done to execute and obtain reasonable assurance
that the financial statements published by Apollo Shoes, Inc. are free and clear of material misstatement. It is going to include the examination of the
evidence and/or the supporting documentation for the amounts that are disclosed and included

Questions And Questions On Audit
Summary
I am in agreement with the facts that Carly presented in her case. I believe that Carly she did a good job on her case study and presented this case
with most of the relevant facts. However, I did skim the case in order to develop a better understanding of a couple of the elements presented. I added
those elements to my critique of this case.
Questions and Answers
1.What factors likely contributed to the oversights made by Ernst & Young auditors during the 2004 AA Capital engagement? Identify measures that
audit firms can implement to minimize the likelihood of such oversights on audit engagements.
The fact that Oprins and McNeely were unfamiliar with the company likely contributed to the oversights that were made by the Ernst & Young
auditors. In the case, it states that McNeely asked the CFO for all documentation that pertained to the tax advances (Knapp, 2015). That request was
never fulfilled. This documentation surely held information that would have allowed for a more realistic audit opinion to be issued. I agree that a long
term relationship can minimize the likelihood of such oversights on audit engagements. As you mentioned, knowledge of the internal control system is
also pertinent. Another measure that would assist in minimizing oversights on audit engagements would be to refrain from a time allowance when
discrepancies are found. The case states that the auditors did exceed the budgeted audit hours (Knapp, 2015). Although, the auditors did go over by

An Investigation Of An Audit
An audit can be described as an official inspection of an organization 's accounts and is typically conducted by an independent body. Companies often
hire external auditors in addition to auditing themselves. External auditors are accountants who work independently of a particular company. They
examine company records and operations to ensure financial statements are accurate. External auditors are important to establishing your small
business ' credibility and to ensuring compliance with tax laws. There are many reasons for an external audit to take place, such as that information
becomes more reliable and useful as a result of the audit. This is known as an information hypothesis. Another justification for an audit... Show more
The Sarbanes–Oxley Act (the "Act") included a number of significant provisions designed to bolster the auditor 's independence from the company
under audit. For example, for listed companies, the Act puts the audit committee–rather than management–in charge of hiring the auditor and
overseeing the engagement. It also prohibits auditors from providing certain nonaudit services to clients and imposes mandatory audit partner rotation.
In 2002, Congress considered requiring audit firms to rotate off an audit engagement after a set number of years during the debates that led to the Act.
Instead, it decided that the idea required more study and directed the General Accounting Office ("GAO") to prepare a report. That report was issued
the following year and concluded that "mandatory audit firm rotation may not be the most efficient way to enhance auditor independence and audit
quality. First, the main argument in favour of mandatory audit firm rotation is an increase in auditor 'independence in fact', ultimately leading to higher
audit quality. In other words, long tenure of the auditor might lead to excessive familiarity between auditor and client. By minimising the maximum
length of tenure, it is argued that auditors will be forced to pay closer attention to the details and be more sceptical in their audit approach. Most
analytical research also confirms a positive effect of rotation on independence, especially in cases of high market concentration

Audit Plan- Glaxosmithkline
Audit Plan– GlaxoSmithKline (GSK)
Key business and audit risk:
In order to make the report more efficient we must identify the key areas of business risk and auditing risk. Business risk can be defined as the risk,
which could affect an organization's ability to achieve its objectives (Gray and Manson, 2007).
Audit risk is defined as the risk that the auditor gives an inappropriate audit opinion when the financial statements are materially misstated (Soltani,
2007). In Gray and Manson (2007)'s book Audit Risk can be split into three separate elements :
1– Inherent risk reflects the auditor's opinion on the possibility of material misstatement on financial statement.
2– Control risk is the risk that internal control policies and ... Show more content on Helpwriting.net ...
Firstly, misstatement via the means of non–existent sales or sales which have been realised in the incorrect period. Secondly sales may not be
recorded in order to lower sales so provide evidence in further periods of higher growth than is actually correct. Thirdly sales could be incorrectly
entered into the system providing incorrect figures. Therefore one would need to verify the sales books, and the controls in place to prevent errors
either intentional or unintentional.
Debts
The level of debt that a company holds and their ability to repay this debt is an important risk factor for GSK. There is a higher risk for GSK than
for some of its competitors, as GSK has a higher leverage than the likes of Pfizer and J&J (Financial Times, 2010). However this in itself can in
some cases be more efficient as long as the entity has the cash flow in order to repay these debts. Therefore one has to ensure during the audit that
GSK will have sufficient cash flows to meet its repayments for the year.
Cash management
Sufficient liquid cash in a company is important to defend against economic uncertainty. A small cash reserve/ cash flow, can be a control and
detection risk, which may result profitable projects having to be scrapped or assets sold to increase cash flow
Also one has to ensure that the book values for GSK's debtor and creditors are correct and verified as they make up large sections of the balance sheet
and a misstatement of these values would

System Audit
BIT 2318Information System Audit Outline:
1) Introduction to IT audit, purpose Types of IT audits, history of IT audit, major events that have prompted the use of and been solved using IT audit
techniques. IT Audit process outline; process and phases. Planning the audit, materiality, risk assessment. 2) Effective information systemaudit.
Evaluation of controls, types and tests of controls. Audit sampling, sampling methods, sample evaluation. 3) Audit automation and system testing:
Computer assisted audit techniques. Traditional vs modern audit tools, Specialized audit software benefits and functions. Applications of CAATs. 4)
Production of audit programmes. Evidence, Issuing reports, types of ... Show more content on Helpwriting.net ...
Technologies are characterized as being either "base", "key", "pacing", or "emerging".
Others describe the spectrum of IT audits with five categories of audits: Systems and Applications: An audit used to verify that systems and
applications are appropriate, are efficient, and are adequately controlled to ensure valid, reliable, timely, and secure input, processing, and output at all
levels of a system 's activity. Information Processing Facilities: An audit used to verify that the processing facility is controlled to ensure timely,
accurate, and efficient processing of applications under normal and potentially disruptive conditions. Systems Development: An audit used to verify
that the systems under development meet the objectives of the organization, and to ensure that the systems are developed in accordance with generally
accepted standards for systems development. Management of IT and Enterprise Architecture: An audit used to verify that IT management has
developed an organizational structure and procedures to ensure a controlled and efficient environment for information processing. Client/Server,
Telecommunications, Intranets, and Extranets: An audit to verify that controls are in place on the client (computer receiving services), server, and on
the network connecting the clients and servers.
And some lump all IT audits

Audit

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Audit