Need help with milestone 3 ACC 640, the attached file includes rubric and guidelines.

ACC 640 Milestone Three Guidelines and Rubric Auditing is a valuable skill in accounting and business, as the odds are very high that you or your organization will be subject to a compliance, federal, IRS, internal, government, or revenue audit at one point in your career. Accountants are required to make professional judgments on both the financial accounting issues and internal accounting forecasts within their organization. The auditor must provide fair, unbiased, materially correct information for investors, employers, employees, and independent stakeholders. This course will help you navigate the relevant processes to provide that unbiased, accurate information. For Milestone Three, you will submit a draft of your memos to upper management. First, you will prepare a memo to be reviewed by the chief financial officer (CFO) of your chosen company that summarizes the audit process conducted. Then, you will assume the role of CFO of the company and prepare a memo to the Board of Directors as to what potential issues the external audit team might find and what the company's response should be. Prompt: Prepare memos with your recommendations to upper management using the findings from your audit report. Specifically, the following critical elements must be addressed: A. Prepare a memo to be reviewed by the chief financial officer (CFO) that summarizes the audit process. 1. Explain any sampling or other audit work that could be done, and if you would recommend the company pursue this additional work. Justify your response. 2. Make recommendations to the CFO on how to mitigate potential risk factors for major business transactions identified in the audit report. B. Assume you are now the CFO. Prepare a memo to the Board of Directors as to what potential issues the external audit team might find and what the company's response should be. 1. Evaluate the findings from the audit report. Be sure to view these findings from the CFO's point of view. 2. Develop a strategy to mitigate risks identified in the audit report. 3. Describe how the company might implement the strategy based on the findings from the audit report. Rubric Guidelines for Submission: Each memo should be a 1-3-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. 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 Memos: Explain Proficient (100%) Explains any sampling or other audit work that could be done and if the company should pursue the additional work Memos: Make Makes recommendations to the CFO on how to mitigate potential risk factors for major business transactions identified in the audit report Memos: Evaluate Evaluates the findings from the audit report from the CFO's point of view Memos: Develop Develops a strategy to mitigate risks identified in the audit report Memos: Describe Describes how the company might implement the strategy based on the findings from the audit report Articulation of Response Submission has no major errors related to citations, grammar, spelling, syntax, or organization Needs Improvement (75%) Explains any sampling or other audit work that could be done and if the company should pursue the additional work, but explanation is inaccurate or inappropriate Makes recommendations to the CFO on how to mitigate potential risk factors for major business transactions identified in the audit report, but recommendations made are inappropriate or lack depth Evaluates the findings from the audit report through the CFO's point of view, but evaluation lacks depth or detail Develops a strategy to mitigate risks identified in the audit report, but strategy is inappropriate or lacks depth Describes how the company might implement the strategy based on the findings from the audit report, but description lacks depth or detail Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Not Evident (0%) Does not explain any sampling or other audit work that could be done and if the company should pursue the additional work Value 19 Does not make recommendations to the CFO on how to mitigate potential risk factors for major business transactions identified in the audit report 19 Does not evaluate the findings from the audit report from the CFO's point of view 19 Does not develop a strategy to mitigate risks identified in the audit report 19 Does not describe how the company might implement the strategy based on the findings from the audit report 19 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Earned Total 5 100% Running head: RISK FACTORS 1 Risk factors Prof: Bryan Strang ACC 640 Ismail Amar Southern New Hampshire University June 26, 2016 1 RISK FACTORS 2 Risks associated with income statement The Amazon Company is subjected to various income statement risks as explained below. Interest Rate Risks: The exposure of the company to the market risks for the changes in the interest rates is due increasing the long term debt which is carried at amortized costs and the fluctuations in the interest rates hence the business stands a risk of paying more interest due such risks. Foreign Exchange risks: International sales accounts for 33% of the total income in 2015 dominated in the foreign currencies of Euros, Japanese Yen, and British Pounds which upon consolidation the foreign subsidiaries, the currencies are subject to foreign exchange fluctuations. Upon consolidations foreign exchange rates vary, net sales and other operating results may differ materially from expectations, and we may record significant gains or losses on the measurement of intercompany balances. For example, as a result of fluctuations in foreign exchange rates during 2015, International segment revenues decreased by $5.0 billion in comparison with the year of 2014. Income Taxes: Tax rate is subject to significant variation due to several factors, including variability in our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in how the company do business, acquisitions (including integrations) and investments, audit-related developments, foreign currency gains (losses), changes in law, regulations, and administrative practices, and relative changes of expenses or losses for which tax benefits are not recognized. Due lack of GAAP, the effective tax rate can be more or less volatile based on the RISK FACTORS 3 amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. This is common trend as observed on the consolidated income statement. It is seen that the company on the income statement has never paid dividend to the owners which is an indicator of the poor income earning rising the goodwill of the investment from the The risk of the increase in the expenses is an issue to be considered by the auditor as the payroll and the related expenses from the 2014 to 2014 and the information on the footnotes indicates there has been an increase in the previous year's meaning that the risk to be taken seriously. The company has also experienced the net income loss in 2014 and 2012 which is the risk that cannot be ignored since the loss was carried forward and it affects the operation of the company in the subsequent years. GAAP: The preparation of financial statements in conformity with generally accepted accounting principles of the United States (\"GAAP\") requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. RISK FACTORS The balance sheet risks: High increase in the receivable from 2014 to 2015 is an indication of poor collection of the receivable hence a risks. There is also increase in the accounts payables a risks that strains the trust and the relationship with the suppliers and indicates increased non-payments of creditors. The increase in the unearned revenues and long-term term debt puts the company in the in the doubt of the going concern issue hence should be accounted for and mitigated. It is seen from the footnotes that the company Suppliers during 2015, no vendor accounted for 10% or more of our purchases with no have long-term contracts or arrangements with vendors to guarantee the availability of merchandise, particular payment terms, or the extension of credit limits. C. Internal control Risks: 1. Revenues Risk factors: Any effort to increase the sales is faced with the following risks. Higher cost of sales as seen in the income statement, stiff competition, foreign exchange risks, high shipping charges. government regulation of e-commerce and other services, electronic devices, and competition, and restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs), nationalization, and restrictions on foreign ownership; restrictions on sales or distribution of certain products or services and 4 RISK FACTORS 5 uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights; Suggested controls: The should be an effort by the company recognizing revenue from product sales or services rendered on the basis of the following: Firs, ensuring that persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Revenue arrangements with multiple deliverables are divided into separate units and revenue is allocated using estimated selling prices. 2. Cash and the risks The increased purchase of the property and the foreign exchange losses plus the increased receivables and high pending payables risks the, high long team debts and furthermore there is high interest rates is an indication of the pending payables which is likely to deplete the little cash available. The risks identified for cash and revenues above are very high in comparison with the previous years. D. Audit Universe: An audit universe represents the potential range of all audit activities and is comprised of a number of auditable entities. These entities generally include a range of programs, activities, RISK FACTORS 6 functions, structures and initiatives which collectively contribute to the achievement of the department's strategic objectives. In the above analysis I identified the audit universe by closely analyzing the risk factors shortlisted, close examination of the financial statements and the footnotes thereafter to get the collective information that is objective in regard to the company. E. Based on your analysis of risk, devise a sampling program for the audit universe: The sampling program simply include the items that have features representing all the items to be studied to form a conclusion. The samples of the lists of the risk factors is picked and the most sensitive items in the income statement such as the revenues and expenses are closely monitored then balance sheet items of sensitivity such as the receivables, payables, longtime debt and the issue of the new shares are considered. The footnotes on the accounting policies such IFRS, GAAP and any changes of such policies and their impact on the financial impacts of the organization is therefore analyzed for the risk. F. The most appropriate procedures: First the auditors familiarize themselves on the internal control system to put the confidence on the reliance of the internal controls before proceeding to the audit procedures in the identified samples above. Secondly the auditors address the issue of revenues where in this case I identified revenue and made comparison with the previous years, the risk factors exhaustively shortlisted and the internal controls fully disclosed and the ratios of earning per share disclosed. It was also very sensitive because of the loss occur in 2012. Analyzing the ratios, expenses associated with the sales, international financial risks and the price fluctuation was the most admirable hence the RISK FACTORS analysis of the alternative solutions such alternative funding from vendors is the solution discussed. 7 RISK FACTORS 8 References Collings, S. (2011). Interpretation and Application of International Standards on Auditing. Hoboken: John Wiley & Sons. Collings, S. (2011). Interpretation and Application of International Standards on Auditing. Hoboken: John Wiley & Sons. Collings, S. (2014). Frequently Asked Questions in ISAs. Hoboken: Wiley. John Wiley & Sons. (2015). Wiley CPAexcel exam review 2015 focus notes: Auditing and attestation. Porter, B., Hatherly, D. J., & Simon, J. (2008). Principles of external auditing. Chichester, England: John Wiley. Qatar Financial Centre. (2009). Qfinance: The ultimate resource. London: Bloomsbury. Running head: DRAFT OF PROCEDURES AND FIELD WORK Draft of procedure and field work Prof: Bryan Strang ACC 640 Ismail Amar Southern New Hampshire University June 6 2016 1 DRAFT OF PROCEDURES AND FIELD WORK 2 Amazon Company These are a scope of money related review forms which helps the inspector to full learning of the matter of the customer whom he is serving. It will characterize and distinguish conceivable danger ranges influencing the business. Planning stage In this stage, I will need to use to comprehend the business, decide the ranges that are under high dangers and in the way of arranging, timing and reach out of other review methods. The diagnostic methods in this stage is significantly in light of the between time budgetary reports, spending plans and even other administration accounts. The logical methodology will demonstrate some significant regions of dangers that else he couldn't have noted. I will likewise utilize scientific methods to audit the nonfinancial data. For instance looking at the quantity of representatives that are utilized in the different years. Using Analytical procedures as substantive tests Some of the time, as a reviewer I will keep an eye on the viability of the methodology in the company. This will diminish the discovery hazard in the monetary articulations. With a specific end goal to distinguish the dangers that is included in the systems that are utilized by the administration, then utilizing the explanatory techniques as substantive tests. Contrast the comparable information and a portion of the earlier year's budgetary information and different customers that are inside the business. Proportion examination will likewise decide the information inconsistencies that is accessible in the business. This will be effectively decide by showing it through diagrams (Davis, 2005). Pattern investigation will likewise help the reviewer to process information for quite a long while and years and figure for every period with a specific end goal to decide the level of consistency of information. When using analytical procedures as substantive tests, I must consider the following; The goals of the methodology in landing with results that are dependable The relationship of the data given and the reach out of every supporting each other as amassed data DRAFT OF PROCEDURES AND FIELD WORK The similarity of the data overall data and, The consistency of the data archived and gave by the administration 3 Note: The dependability of the data that is gotten from the utilization of expository techniques as substantive tests relies on upon whether the examiner got the proof from the inward or the outside source (Gilbert & Terry, 2005). Data from the outside gatherings is more solid when contrasted with the interior wellspring of data. Analytical Procedures as part of overall Review of the Audit At the point when the review is appropriately finished, then I have to utilize the investigative strategies to survey the review so as to make a conclusion with reference to whether the money related proclamations all in all speaks to reality of the substance. The conclusion that is gotten from the consequences of the methods must validate with each other concerning the individual segments of the review (Power, 1999). The utilizing the logical method as the review audit, may show a portion of the territories which require further examinations. For instance: Territories that demonstrated deviations or suspected connections. For instance zones with examples that veered off from anticipated examples. Consistence with the universal evaluating norms and the compelling dates for arrangement of monetary articulations among different perspectives which the reviewer may indicate basic concern. The steps I would take to review the company's business transactions First I would consider the key areas of interest. These will include; The zones of high hazard, for example, offices taking care of trade and acquirement out the firm Policies execution and isolation of obligations in the association. This will recognize the likelihood of the one single capable individual in the association controlling the exchanges in the association. Meet the administration and representatives and make inquiries. This will see whether the data gave from the two finishes will rhyme. DRAFT OF PROCEDURES AND FIELD WORK 4 Finally, consider the persistent reviews and its discoveries lastly make a subsequent meet-up recognize what changes have the administration received from the proposals that were made in the before reviews. How to utilize analytical procedures when reviewing business transactions While surveying the organization's exchanges, the systematic strategies will help me to recognize how the different data of confirmation gave could be in amicability or they are clashing with each other (Trochim, n.d.). For instance I will keep in touch with the loan bosses requesting that they affirm what they owe the firm. From their answer, I would consider their reaction and relate it with what the administration has given. On the off chance that I will take note of any deviations then I will burrow to look for proof from different wellsprings of confirmation. I will likewise inquire from the representatives and administration and mention objective facts where important. Appropriate fieldwork needed in high-risk business transaction When you discover that the organization's exchanges are at high hazard, then as a reviewer you have to survey the organization's bookkeeping systems. Given the money and the income as our case in this way, I will need to survey the anticipated income and the real income. Any deviations that are noted then the administration will need to clarify in point of interest. I would likewise consider the past information on of income eras and consider the conceivable reasons for the deviation. On the other side, the level of insignificant money must be kept up inside the levels set by the administration. This will empower the administration to minimize the robbery of money (Jolly, 2003). I will likewise gone through the interior controls and bookkeeping arrangements embraced by the firm keeping in mind the end goal to decide its viability and dependence in giving solid data. Things needed in the field to review high-risk business transactions For this situation I will require the fitting number of review group, working papers, the past information of the firm and the present information demonstrating business exchange. I would likewise require to be given receipts of all the income exchanges and the money consumptions I the association. This will help in the correlation of the real information arranged for the different years. DRAFT OF PROCEDURES AND FIELD WORK 5 Administration outlines: this will demonstrate the stream of isolation of obligations inside the association. This will empower the reviewer to decide how exchanges are recorded inside the association. Could you convey this information through charts or other supporting documentation? Evaluators are constantly required to archive their last provide details regarding the last reporting. Consequently, I would consider utilizing story notes to give all the essential data I accumulated in the field. This will clarify the planning, who did the review and the discoveries of the review and any important data. I can likewise utilize diagrams keeping in mind the end goal to permit the ensuing examiner to note regions under danger through the stream outlines. From the diagrams will shade territories with various hues to demonstrate distinctive size of danger. Here is the test to assess appropriate assertions for designated high-risk business transactions The auditor should consider all the transactions based on the assertions below Occurrence: The recorded exchanges more likely than not happened in the association. The exchange probably happened and the money must be recorded. Completeness: All exchanges must be recorded in the budgetary explanations. The genuine income deals must have be recorded precisely. Accuracy: The exchanges must be recorded in the suitable sums. Both the units sold and the income created must be exact and overhauled. Cut-off: Exchanges recorded in the bookkeeping time frames. The money and the income must be recorded in the suitable year. Existence: The genuine money must exist and not only the supposition of its presence. Classification: All the income exchanges must be recorded by appropriate records. This will stay away from concealed income exchanges. Note: Every one of the exchanges must be affirmed taking into account the above affirmations with a specific end goal to guarantee that the reviewer will settle on an educated choices when giving his last assessment (\"The financial,\" 2012). DRAFT OF PROCEDURES AND FIELD WORK 6 References Davis, Robert E. (2005). Information technology auditing: An adaptive process. Pleier Corporation. ISBN 978-0974302997 Gilbert, W. Joseph and Terry, J. Eagle (2005). The use of Control Self-Assessment by Independent Auditors. The CPA Journal. Power, Michael (1999). The audit society: Rituals of verification. Oxford: Oxford University Press. Trochim, W. M. K. Probability sampling. Research Methods Knowledge Base 2nd Edition. Jolly, Adam (2003). Managing business risk. A Practical Guide to Protecting your Business. Kogan Page Limited p. 6-7. ISBN 0-7494-4081-3 The financial risk assessment report of Indiana department revenue. (2012). Deloitte and Touch