...Types of Audits Each business process at Kudler Fine Foods has unique transactions and qualities. Therefore, a unique type of audit is required to meet specific circumstances for each process. The four main types of IT audits are attestation, findings and recommendations, Statement on Auditing Standards (SAS) 70 audit, and SAS 94 audit. Attestation An attestation is an agreed upon procedures audit. It requires the auditor to provide assurance on a specific subject matter and a conclusion on reliability. The auditor may make an assertion regarding an organization’s compliance with specific standards or requirements. The steps of an attestation audit are as follows: 1) a client makes an assertion, 2) the auditor examines and analyzes the client’s performance according to the agreed terms, and 3) the auditor reports the findings, or lack thereof, to the client (Hunton, Bryant, & Bagranoff, 2004). Findings and Recommendations A findings and recommendations review is generally considered as consulting or advisory services. A findings and recommendations review is often confused with an attestation. However, the auditor does not produce an opinion from this type of audit. Instead, the auditor provides a summary of the work performed in connection with the agreement. Common examples of findings and recommendations audits include system implementations, security reviews, IT improvement reviews, and project management. During a findings and recommendations review...
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...* UNMODIFIED REPORT * UNMODIFIED- The financial statement shows a true and fair view about the company’s financial position * There are no “if”, ”but” or additional information provided. * MODIFIED REPORT * The choices for QUALIFIED can be described in a matrix * Example of insufficient appropriate audit evidence … Except as discussed in the following paragraph… We did not observe the counting of inventories at 31/12/200X… unable to determine inventory quantities by other methods… In our opinion, except for the effects of such adjustments to inventory, if any, had we been able to satisfy ourselves as to physical inventory… The financial statements give a true and fair view… * Example of disclaimer of opinion … Except as discussed in the following paragraph… We were not able to observe all physical inventories at 31/12/200X… unable to determine inventory quantities by other methods… Because of the significance of the matters discussed… we do not express an opinion on the financial statements. * Example of Material misstatement / “except for” As discussed in paragraph 17, no depreciation has been provided… not in accordance with International Accounting Standards… The provision for the year should have been $X… profits would be decreased by $Y. In our opinion, except for the matter referred to above, the financial statements give a true and fair view… * Example of Material misstatement / “adverse opinion” As discussed in paragraph 15...
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...auditing
Example waste audit specification
Introduction
In 2010-11 it is estimated that the Victorian healthcare system generated 41,674 tonnes of waste. About 70 per
cent was general waste, 20 per cent was recycled and 10 per cent was clinical waste. Clinical waste is the most
expensive waste stream comprising on average two-thirds of total waste costs.
Waste audits are an essential waste management tool to enable healthcare providers to understand how their
waste management system is performing, waste management practices across their sites and to verify waste
data and costs provided by the waste contractor. The Department of Health has prepared this example waste
audit specification to assist Victorian public healthcare services in undertaking waste audits.
The example specification is provided solely on the basis that healthcare services will be responsible for making
their own assessment of the applicability of the information provided to their circumstances. Those relying on it
are advised to verify all relevant statements and information and obtain independent advice where appropriate.
The department does not accept any liability to any person for the information or advice (or the use of such
information or advice) that is provided in this example tender clause or incorporated into it by reference.
Example Specification
Overview
The objective of the waste audit is to provide
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...Auditing Review Sheet Period Test II Chapter 4. Audit Evidence and Audit Documentation. * Understand the types of management’s assertions (assertions about (1) account balances, (2) transactions, and (3) disclosures). Should be able to describe in own words, give own examples and relate to examples given in the exercises. * 1) Account Balances Existence – assets, liabilities, and equity interests exist. Rights and obligations – the entity holds or controls the rights to assets, and liabilities are the obligations of the entity Completeness – all assets, liabilities and equity interests that should have been recorded have been recorded. Valuation and allocation – assets, liabilities, and equity interests are included in the financial statements at appropriate amounts, and any resulting valuation or allocation adjustments are appropriately recorded. * 2) Transactions Occurrence – transactions and events that have been recorded have occurred and pertain to the entity (sometimes referred to as validity) Completeness – all transactions and events that should have been recorded have been recorded. Authorization – all transactions and events have been properly authorized. Accuracy – amounts and other data relating to recorded transactions and events have been recorded appropriately and properly accumulated from journals and ledgers. Cutoff – transactions and events have been recorded in the correct accounting period. Classification – transactions and events...
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... |a. finance. | | |b. auditing. | | |c. accounting. | | |d. economics. | | | | |2. |In the audit of historical financial statements, which of the following accounting bases is the most common? | |easy | | |c |a. Regulatory accounting principles. | | |b. Cash basis of accounting. | | |c. Generally accepted accounting principles. | | |d. Liquidation basis of accounting....
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...Chapter 1 Multiple-Choice Questions 1. easy Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called: c a. finance. b. auditing. c. accounting. d. economics. 2. easy In the audit of historical financial statements, which of the following accounting bases is the most common? c a. Regulatory accounting principles. b. Cash basis of accounting. c. Generally accepted accounting principles. d. Liquidation basis of accounting. 3. easy Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n): b a. accounting and bookkeeping service. b. attestation service. c. assurance service. d. tax service. 4. Three common types of attestation services are: easy a. audits, reviews, and “other” attestation services. a b. audits, verifications, and “other” attestation services. c. reviews, verifications, and “other” attestation services. d. audits, reviews, and verifications. 5. (SOX) easy The organization that is responsible for providing oversight for auditors of public companies is called the ________. d a. Auditing Standards Board. b. American Institute of Certified Public Accountants. c. Public Oversight Board. d. Public Company Accounting Oversight Board. 6. (SOX) The Sarbanes-Oxley Act applies to which of the following companies? easy a. All companies...
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...Audit Proposal Audits are a critical and an important part of every company whether performed internally or externally. With the expansion of Kudler Fine Foods and update of their information system, the company must ensure system processes are functioning properly. Conducting an audit will identify any problems with the newly implemented computer system. There are several types of audits that can be performed for each process. The most important factor is choosing the appropriate type of audit that best fits the process. Most audits are conducted similarly and should always be completed in an efficient and effective manner. Furthermore, there are events that could prevent the reliance of an audit through the computer in which management must be made aware of and evaluate accordingly. Types of Audits There are various types of audits that will give credence to the accounting records, accounting policies, and financial statements of a business organization. For example, an internal audit can be conducted of the accounting department to examine company policies and procedures as well as development and evaluations of internal controls. Internal audits will provide management with insight and recommendations based on analysis and assessment of data and business processes. An external audit will assess the computer-based accounting system and provide judgment on the accuracy and fairness of financial statements. “The fairness evaluation is conducted in the context of generally...
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...Types of Audits To distinguish between the types of audits that may be used for each process of Kudler Fine Foods IT Systems, the auditor must first determine which audit is appropriate. There are different audits available for the processes at Kudler Fine Foods; including attestation, findings and recommendations, SAS 70, and SAS 94. The auditor will need to decide which audit is most appropriate for the Accounting Information System and the Retail Enterprise Management System incorporated into Kudler’s Systems. During an attestation audit, the auditor will provide assurance for a specified topic or issue for which the client is responsible. An assertion is made based on specified criteria, and the results are provided in a report. The findings and recommendations audit is used when, “implementing systems, security review, database application review, IT infrastructure and improvements needed engagement, project management, and IT internal audit services” (Hunton, Bryant, & Bagranoff, 2004, p. 217). This type of report does not include the auditor’s opinion, but any information pertaining to the work performed is included. The SAS 70 audit includes information pertaining to a company’s internal controls and is used when services, such as payroll are outsourced to an ADP. An ADP provides payroll services to companies at a lower rate than it would cost if the company were to handle this in-house. An SAS 70 audit is used when companies want to assure that they have implemented...
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...inventory, and accounts payable. The accounting firm recommended the use of AIS. The type of software recommended would be industry specific software that can be purchased of the rack. This was decided because of the reduction in cost to acquire the program compared to a customized system. Also the training on and maintenance of the program will be included in the purchase price. The next step would be to determine what type of audit that would best fit the processes that are targeted. There are four types of audits. There is the attestation audit, which according to "KHSA Karren, Hendrix, Stagg, Allen" (2012), "are assurance engagements that require procedures to be applied to financial reporting processes and controls, but do not necessarily require an audit. Then there are findings and recommendations that are used when implementing a system. The next type of audit is the SAS 70 audit. According to "NBD Accountants Consultants" (2008), “It is an auditing standard put forth by the AICPA that is utilized by auditors for examining internal controls in service organizations. Service organizations are the host of companies that provide critical, third-party outsourcing services to other companies.” The final type of audit is the Statement on Auditing Standards (SAS) 94: The effect of information technology on the Auditor’s consideration of internal control in a Financial Statement Audit. The SAS 94 audit provides guidance to auditors concerning the influence of information technology...
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...Public Schools CHAPTER 16 TABLE OF CONTENTS Chapter 16 ____________________________________________________16.1 Audit Responsibilities __________________________________________16.1 Types of Audits______________________________________________________ __ 16.2 Financial Audits ___________________________________________________ 16.2 Single Audits _____________________________________________________ 16.2 Program-Specific Audits_____________________________________________ 16.2 Performance Audits ________________________________________________ 16.2 Auditor General Audits______________________________________________ 16.3 Management VS Auditor Responsibilities ____________________________________ 16.3 Selecting An Independent Auditor _________________________________________ 16.4 Preparing For Your Annual Audit __________________________________________ 16.5 Documents _______________________________________________________ 16.5 Financial Statements _______________________________________________ 16.6 Other Schedules And Reconciliations __________________________________ 16.6 Other Supporting Documentation _____________________________________ 16.6 Single Audit Requirements _______________________________________________ 16.7 Background ______________________________________________________ 16.7 Commonwealth Implementation ______________________________________ 16.7 Audit Scope ______________________________________________________ 16.8 Risk-Based Approach For Determining Major Programs...
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...5- Evidence and Documentation The relationship of Audit Evidence to the Audit Report Management Assertions * Management is responsible for the fair presentation of the financial statements. Assertions are representations by management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types of potential misstatements that may occur Under current auditing standards, management assertions fall into the following categories: * Assertions about classes of transactions and events for the period of audit * Assertions about account balances at the period end * Assertions about presentation and disclosure Assertions about classes of transactions and events during the period Transaction-related assertions help the auditor conceptualize, plan and perform audit procedures Occurrence Completeness Authorization Accuracy Cut-off Classification Assertions about account balances at the period end Assertions about account balances relate directly to the ending balances of the accounts included in the financial statements. Balance-related assertions help the auditor conceptualize, plan and perform audit procedures Existence Rights and Obligations Completeness Valuation and Allocation Assertions about Presentation and Disclosure This category of assertions relates to presentation of information in the financial statements and disclosures in the notes that are directly...
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...What Should the Auditor Audit? Successful operational auditing begins with the auditor understanding the business: What are the core products, business units, and employee and customer bases? How can the auditor begin to survey the business to begin to put an audit plan together? What resources are available or should be accessed by the auditor? There are various types of audits depending on the specific type of audit being performed. However, even though there are different types of audits, the audit procedure should remain the same. The audit should look for compliance with the policies and procedures. The Auditor should investigate and evaluate the level of compliance and the effectiveness of the company or organizations. Depending on the type of audit being performed, the audit will evaluate and identify financial issues within the company to determine if it finances are allocated the way they are supposed to be. The auditor also looks at inconsistences to determine if there is a possibility of theft or fraud. There are two different types of auditors, internal and external. Operational auditing is considered to be an internal audit. In today’s society it has become very important to the organization, especially with so much diversity in businesses. An operational audit will allow for the diversified product lines while establishing a global presence. The internal auditors will have to have an in-depth knowledge and a higher level of expertise to maintain the requirements...
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...Chapter 7 Audit Evidence Key objectives: 2. Identify the four evidence decisions made by auditors in creating an audit program. 3. Specify the characteristics that determine the persuasiveness of evidence. 4. Know the eight types of evidence used by the auditor, including the quality of each type of evidence. 5. Understand the purposes of audit documentation. The focus in chapter 7 is on the evidence accumulation process, which falls under the third standard of field work. We will be especially interested in the types of evidence, and the characteristics that make that evidence competent or reliable. The auditor must gather sufficient appropriate audit evidence to support the audit opinion. 1. Four Evidence Decisions 1. Which audit procedures to use. 2. What sample size to select for a given procedure. 3. Which items to select from the population. 4. When to perform the procedures. These are planning decisions. The most important decision is reaching an audit conclusion for each procedure based on the evidence. 1. Audit procedures are designed to meet the general audit objectives discussed in Chapter 6, and are laid out in the audit program. 2. Sample Size - Sampling is discussed in 49 detail in chapters 15 and 17. The sample size should be sufficient to reach a conclusion about the population. Sample size may be set by statistical formula, firm policy, or auditor judgment. 3. Sample Selection - Sample selection is a function of the objective of the test, and is also discussed...
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...audit Material misstatement: A misstatement in the financial statement can be considered material if knowledge of the misstatement would affect a decision of a reasonable user of the statement. Third party liability: A situation in which one party is held partly responsible for the unlawful actions of a third party. Independence in fact: Independence in fact exists when the auditor is actually able to maintain an unbiased attitude throughout the audit. The auditor’s ability to take an unbiased viewpoint in the performance of professional services. Competence of evidence: The degree to which evidence can be considered believable or worthy of trust. Acceptable audit risk: It is a measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and unqualified option has been issued. Evidence: Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with established criteria. Compliance audits: It is a type of audit that determines whether the audited is following specific procedures, rules or regulations set by some higher authority. Audit manual: Resources or guidance used by auditor to conduct an audit. Teeming and lading: It is a type of fraud that involves the crediting of one account through the abstraction of money from another account. An attempt to hide missing funds by delaying the recording of cash receipts in a business's books...
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...Chapter 2: The Risk of Fraud and Mechanisms to Address Fraud: Regulation, Corporate Governance, and Audit Quality 1. The auditor is not responsible for the presentation of financial statements; therefore, the auditor has no responsibility for fraud in the financial statements. FALSE 2. An example of fraudulent financial reporting is the CFO intentionally overstating sales to boost profits. TRUE 3. The auditor is responsible for actively considering fraud risks in order to obtain reasonable assurance that the financial statements are free of material fraud. TRUE 4. Auditors need to consider fraud arising from misappropriation of assets and fraudulent financial reporting. TRUE 5. Fraud is an intentional act involving the use of deception that results in a material misstatement of the financial statements. TRUE 6. An example of fraudulent financial reporting is the treasurer's diversion of hundreds of thousands of dollars into a personal money market account. FALSE 7. BruceCo. has accounted for the revenue of Jiffy Mac, Inc., one of its suppliers as though it were its subsidiary. BruceCo. has probably committed fraud because of its misapplication of consolidation principles. TRUE 8. Consideration of fraud in financial statement audits is a relatively new concept derived originally from the Sarbanes-Oxley Act. FALSE 9. The most important lesson to be learned from The Great Salad Oil Swindle is that auditors...
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