ACCT400-8 assignment

docx

School

American Public University *

*We aren’t endorsed by this school

Course

400

Subject

Accounting

Date

Apr 3, 2024

Type

docx

Pages

Uploaded by PresidentMorningKudu20

Audit Plan: Bullseye 1 Audit Plan: Bullseye American Public University ACCT 400: Auditing Professor Ingrid Toledo

Audit Plan: Bullseye 2 Audit Plan: Bullseye The general merchandise retailer, Bullseye, is due for their annual audit from a prestigious CPA firm. Bullseye is a publicly traded company with hundreds of stores throughout the United States, but no foreign operations. As a public company, Bullseye requires an integrated audit, which is “an audit that includes audit reports on both a company’s internal control over financial reporting and the financial statements” (Whittington, R. & Pany, K., 2019). The following steps are examined by the audit team: plan the audit, obtain an understanding of the client and its environment, including internal control, assess the risks of misstatement and design further audit procedures, perform further audit procedures, complete the audit, and form an opinion and issue the audit report. An integrated audit will successfully be performed by the CPA firm’s audit team to ensure Bullseye Company maintains good financial health. Plan the Audit To begin planning the audit, an auditor must consider the ongoing status of Bullseye Company. This indicates that there is a large amount of information from previous year’s audits. The first step is to determine the requirements for the audit plan, which include the timing of the engagement and the financial statements that will be examined. During the planning process, auditors will determine all analytical or other procedures in connection with risk assessments. The auditing team will develop an overall audit strategy for auditing Bullseye Company. It is important to note that the auditors are aware of the possibility of misstatements throughout the entire audit process. The goal for this audit is to be efficient, timely, and correctly completed. Obtain an Understanding of the Client and Environment

Audit Plan: Bullseye 3 Bullseye has been a client of the CPA firm for many years, in fact, Bullseye is the firm’s most important client. The CPA firm is remarkably familiar with Bullseye and their environment. The most essential aspect is for the auditors to establish the nature of internal control within Bullseye. The local managers are responsible for ordering supplies, depositing cash from sales, and can withdraw currency to meet the daily business needs of their store. Internal Control Audit The internal control audit consists of the following steps: plan the engagement, use a top- down approach to identify controls to test, test and evaluate design effectiveness of internal control, test and evaluate operating effectiveness of internal control, and form an opinion on the effectiveness of internal control. Using the top-down approach, “the auditor then examines entity-level controls, focusing on significant accounts and disclosures, as well as their relevant assertions” (Bragg, S. 2022). The CPA firm will actively investigate Bullseye’s audit committee and their ethics because this is a strong indicator of material weakness. Our audit team is interested in fraud risks from the top-level management sector, as this can be an elevated risk of fraud. Significant accounts and disclosures will be audited upon present factors such as size and composition, accounting and reporting complexity, and volume of activity. Our auditors will be combing over the routine and nonroutine transactions of Bullseye to eliminate fraud. The audit of internal control is extremely important for Bullseye’s audit. Assessing Risks In past audits, Bullseye has had minor problems that were the result of human error. The errors consisted of transposing numbers or entering transactions into incorrect accounts. The IT professional within the auditing team is a powerful asset because Bullseye relies heavily on technology to manage inventory, payroll, and other financial components. The auditors will have

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Audit Plan: Bullseye 4 a collection of information from procedures with evidence on inherent risks and control risks. Auditors assess the risks of misstatements of accounts, transactions, and disclosures. Depending on the level of assessed risk, further audit procedures may be required. Perform Further Procedures In this step of an integrated audit, a combination of additional tests of control and substantive procedures are applied to account balances, transactions, and disclosures. Tests of control are defined as “tests directed toward the design or operation of a control to assess its effectiveness in preventing or detecting material misstatements of financial statement assertions” (Whittington and Pany 2019, pp 198). For example, the management at Bullseye can handle many cash transactions. Auditors will focus on this area of accounts, such as cash receipts, journal entries, accounts receivable, and accounts payable, to compare and verify that correct amounts have been posted. Substantive procedures are defined as “tests of account balances and transactions designed to detect any material misstatements in the financial statements” (Whittington & Pany 2019, pp 198). Substantive procedures are linked to a specific transaction during a test of controls. Complete the Audit Once all control tests and procedures are done, the auditors perform several final procedures at the end of the audit. Auditors will search for unrecorded liabilities, complete final analytical procedures, look for any contingency losses, and obtain a management report while completing the audit. Form Opinion & Issue Audit Report

Audit Plan: Bullseye 5 The overall analysis of the audit will allow us to form an opinion. Auditors can use the formed opinion based on all the information and evidence collected to create and submit the audit report. Conclusion Bullseye will maintain a healthy financial status with the CPA firm’s integrated audit plan. Auditors have utilized the steps: plan the audit, obtain an understanding of the client and its environment, including internal control, assess the risks of misstatement and design further audit procedures, perform further audit procedures, complete the audit, and form an opinion and issue the audit report to successfully complete the integrated audit. Auditors are highly confident from the evidence provided during the audit to ensure Bullseye’s requested result of an audit that is efficient as possible.

Audit Plan: Bullseye 6 References Bragg, S. (2022, May 24). Top-down approach to auditing. Accounting Tools. Retrieved May 25, 2022, from https://www.accountingtools.com/articles/top-down-approach-to- auditing.html Whittington, R. & Pany, K. (2019) Principles of Auditing & Other Assurance Services. McGraw-Hill Education. Twenty-first Edition.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version