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hello please see attached assignment I need help with thanks ACC 700 Milestone Two Guidelines and Rubric The second milestone is a rough draft of

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hello please see attached assignment I need help with thanks

image text in transcribed ACC 700 Milestone Two Guidelines and Rubric The second milestone is a rough draft of the second artifact for your professional portfolio, a sample audit. The sample audit will consist of three main parts: the business risk analysis, the sample audit program, and the report of recommendations. This will be graded using the rubric at the end of this document and is an opportunity for you to organize your thoughts and receive feedback from your instructor for the final submission. Note that the submission guidelines for this milestone are less demanding than those for the final submission. Once you have submitted this milestone and received feedback from your instructor, it is up to you to incorporate this feedback and complete the artifact by meeting the submission requirements found in the Final Project Guidelines and Rubric document. Newham Company Information Newham Company is a publicly traded company operating in the \"personal product\" industry. Newham manufactures cosmetic and body-care products. These products are sold to large department chain stores, such as Target and Walmart, to be sold and distributed to the final consumer. Competitors include Revlon, Inc. (REV - NYSE) and Avon Products, Inc. (AVP - NYSE). Newham Company has experienced steady growth over the past several years. Recently, there has been a change in executive management, including the CEO and CFO. The change was sparked by questionable bonus payments that were paid to the executive management team based on the company's performance. In addition, a recent lawsuit has been filed based on claims that a new product was not properly advertised, leading many customers to experience allergic reactions. Sales and Accounts Receivable A sample of weekly sales invoices shall be analyzed from the sales report by product category. All sales are on account. Sales are classified into four product categories: cosmetics, skin care, fragrance, and personal care. Charges to customer accounts should be dated with the date of shipment. Sales invoices are prepared in batches on a daily basis using numbered sales invoices. Sales invoice numbers are automatically generated by the company's computer system. The accounts receivable clerk does not have appropriate computer rights to override the computer-generated invoice number. Upon preparing sales invoices, the accounts receivable clerk verifies that the first invoice number of the batch is consistent with the last invoice number of the previous batch. Inconsistencies or skipped sales invoice numbers are investigated and resolved before new sales invoices are prepared. The items shipped are compared to the items billed for proper quantity, price, and other sales order terms. The accounting department supervisor compares and reconciles a copy of the daily sales invoice batch report to the daily accounts posting report indicating the individual accounts. The daily account posting report is prepared and sent by the accounts receivable department. Discrepancies are investigated and resolved to help assure that the customer subsidiary accounts are posted for the same total amount posted to the control account. At the end of each month, the total of the trial balance of customer account balances (prepared by the accounts receivable department) are reconciled to the general ledger control account by the accounting department supervisor. Sales invoice batches are dated with the date of shipment, and totals of each batches are accumulated each month and recorded in the accounts receivable control and sales revenue accounts. The accounting department supervisor approves all monthly summary entries before posting to the general ledger. The controller approves all cash refunds and allowance credit memos for sales returns, after initiation by customer service. Cash Management The monthly bank statements are mailed to the controller's office. Duplicate deposit slips are retained and used when bank deposits are made, the cash receipts journal listing, and the cash disbursements listing to reconcile the general bank accounts. The payroll bank account is also reconciled, utilizing the payroll register retained by the controller's office. The assistant controller oversees all cash management and activity, including the performance of the bank account reconciliation for each bank account held by the company. The assistant controller compares the cash receipts journal and daily deposit records with the bank deposits and duplicate deposit slips during the bank account reconciliation. Internal auditors will randomly review the bank account reconciliations. Cash Receipts and Accounts Receivable Processing All cash receipts from customers related to sales are credited to accounts receivable individual and control accounts. Cash receipts are received by mail and opened by the office secretary. The office secretary prepares the cash receipt listing and daily deposit. A copy of the cash receipt listing and duplicate deposit slip is sent to the controller's office. Another copy of the cash receipt listing and the remittance advice are sent to the accounts receivable clerk for posting. The accounts receivable department posts credits to individual customer accounts, dating the entries with the date of the remittance advice and cash receipt listing received. Statements of accounts receivable balances are mailed to customers each month by the accounts receivable accounting department. Customers' reports of disputes or differences shall be handled by customer service. Cash Disbursements All disbursements are made by check, signed by the controller. Artifact Two: Sample Audit Program Your second portfolio artifact will be the professional audit program based on PCAOB audit standards that you create for Newham, an influential client at S.N.H.U, LLC. Make sure to incorporate the feedback you receive from your instructor while developing this audit program. The following sections should be included: Business Risk Analysis: Identifying risk in an organization and the environment in which it operates is the first step in approaching a potential audit and designing an effective audit program. To analyze business risk, you must: o o o o Gain an understanding of Newham Investigate the industry in which Newham operates Analyze and assess the risk, including fraud, involved in the company and industry Identify the relevant PCAOB audit standards and address their relevance to the Newham audit risk assessment Sample Audit Program: An audit program involves compiling a list (program) of procedures for the auditors to perform in order to obtain evidence and reasonable assurance that internal controls are operating properly and thus producing accurate financial statements. To compile a sample audit program, you have been provided with tests of control in revenue and inventory. You must identify the relevant PCAOB audit standards and address their relevance to the Newham audit program. Include other elements as applicable to Newham. Report of Recommendations: Based on an auditor's experiences and knowledge of accounting, finance, and common errors or pitfalls, it is common for an auditor to provide recommendations. The sample audit program addressed here is merely a small sample, not a comprehensive program. Thus, recommendations for further risk analysis, sample methods, and other concerns should be offered. In your report of recommendations to the head of the new audit team, include the following sections: o o o o Explanation of findings in the risk analysis Sarbanes-Oxley concerns or requirements Recommendations on appropriate sampling methods Recommendations for preparation and success in the external audit Guidelines for Submission: Your paper must be submitted as a two- to three-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format. Round all answers up to the nearest dollar value in any calculations. Note that this milestone is a rough draft and the submission guidelines are different for the final project. The final paper will be four to five pages in length with at least seven sources. Refer to the submission guidelines in the Final Project Guidelines and Rubric document. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Business Risk Analysis Sample Audit Program Report of Recommendations Articulation of Response Proficient (100%) Identifies risk in the organization and the environment in which it operates; clearly shows an understanding of Newham and the industry; assesses risk and identifies any relevant PCAOB audit standards Identifies the relevant PCAOB audit standards and addresses their relevance to the Newham audit program Provides recommendations as to explanation of findings, Sarbanes-Oxley concerns, appropriate sampling methods, and the external audit Submission has no major errors related to citations, grammar, spelling, syntax, or organization Not Proficient (0%) Does not identify risk in the organization or the environment in which it operates; does not show an understanding of Newham or the industry; does not assess risk or identify any relevant PCAOB audit standards Does not identify the relevant PCAOB audit standards or address their relevance to the Newham audit program Does not provide recommendations as to explanation of findings, Sarbanes-Oxley concerns, appropriate sampling methods, and the external audit Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Earned Total Value 30 30 30 10 100% Running head: Newham Company 1 Name Institution Instructor Course Date Running head: Newham Company 2 Introduction This paper analyzes business risks facing Newham Company which is a publicly traded company operating in the personal product industry. Business risks in Newham could result from frauds such as embezzlement and misappropriation of the company's funds. It could also result from non-compliance to the policies in the industry, management risk and safety risks. The paper also presents an audit program for the company and recommendations on audit procedures that can help in risk identification and assessment. There are many business risks facing Newham Company. These include the following; There is the risk of fraud; this is risk that the staff may deliberately manipulate the financial accounts such as cash for unlawful gain. Exposure to the fraud risks can include misappropriation of the company's assets, corruption and fraudulent financial statements. The employees may collude to carry out frauds in the Newham Company which can be detrimental to the financial position[Are12]. Management risks include the risks that the management may not be acting in the best interest of the shareholders but rather they may be acting in their own interest. Change in the management in Newham Company was sparked by the questionable bonus payments that were paid to the executive team. This shows that the executive members in this organization may be using their power to award themselves excess bonuses at the expense of the shareholders. Running head: Newham Company 3 Safety risks include risks where Newham Company may be posing health hazards to the customers. There has been a law suit that has been filed due to a product that was in appropriately advertised and consequently caused allergic reactions on many customers. Risk of misrepresentation is whereby financial statements may be understated or overstated of the financial figures[Are12]. Compliance risks entail a situation where Newham may not be following the stipulated regulations. For example the company may not be following the policies rules and laws of advertising. This may have led to false advertising that made the company customers experience allergic reactions. Relevant PCAOB audit standards The objective of the audit is to appropriately identify and asses any risk of material misstatement. The audit is also to help provide a basis to in designing and in the implementation of response to the risk of material misstatement. The audit in this case will help in assessing the risk of material statements[PCA]. Competence is required in the audit for risk assessing. The procedures to be performed have to be sufficient so as to provide a reasonable basis for identifying any material misstatements. The auditor has to obtain an understanding of the company and its environment[All11]. The risk assessment procedures have to apply for both the audit and for the internal control in the audit of the financial statements. For the significant risks, substantive have to be performed Running head: Newham Company 4 Due professional care have to be exercised and it's important to exercise professional skepticism. Professional skepticism is an attitude is an attitude that help to question the mind and in case can help in the critical assessment of the appropriateness of and sufficiency of the of audit evidence. Fraud risk needs professional skepticism to gather and evaluate evidence[All11]. Audit program The objective of the audit is to perform risk analysis and asses any risks in the company that may have caused material statement in the financial statement. Also the audit seeks to examine the compliance risks and safety risks in the company. procedures Establishing the materiality levels to establish errors Checking whether the sales invoices have been entered well in accounts receivable ledger to establish any errors and frauds Vouching to ensure that debtors accounts are accurate Check the cash disbursements for any irregularity Checking the invoices and whether they are serially numbered Recalculation of the profit to whether executive team awarded themselves excess benefits Preforming reconciliations of the bank and cash balance to check any misappropriations. Examine safety standards in the company to asses safety risks Check for compliance as to whether the company has complied to the laws and regulations to establish compliance risks. Make inquiries from the management and employees regarding any unclear issues. Recommendations Newham Company approach to Sarbanes-Oxley risk assessment has to encompass assessment of the completeness and accuracy of transactions as they are entered into. Also risks associated with the segregation of duties, confidentiality and integrity of financial data have to be looked into[Sar1]. Running head: Newham Company 5 For better risk analysis external audit can include sampling methods that can be utilized to help in the identification of risks. Sampling method entails the application of compliance and substantive procedures for further risk identification. Sampling can help in identifying and evaluating evidence of any misappropriation and any non-compliance[Rom04]. Sampling can be used in compliance tests to evaluate the controls in determining whether they are in place and whether they are working. For example the tests can be performed on the information system to evaluate the outcome of the control. A test can also be performed on the invoices to ensure that they are appropriately pre-numbered and all are accounted for. References Allen. (2011). Auditor risk assessment: Insights from the academic literature. Accounting Horizons, 20(2), 157-177. Arens. (2012). Auditing and assurance services. an integrated approach. Boston: Prentice Hall. Romano. (2004). The Sarbanes-Oxley Act and the making of quack corporate governance

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