Need help with the final project ACC 640. The attached file includes rubrics and guidelines.

ACC 640 Final Project Guidelines and Rubric Overview The final project for this course is the creation of an audit report with memos. 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. The purpose of the assessment is to familiarize you with the process of auditing and what to do with the auditing information once you have it. You will explore how to plan audit work, analyze financial statements, perform tests on that information, and properly and professionally communicate the results of an audit. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, and Seven. The final submission will be due in Module Nine. In this assignment, you will demonstrate your mastery of the following course outcomes: Determine risk factors for organizations based on analysis of audit risk, audit evidence, and financial statement assertions Develop strategies to mitigate potential risk factors using organizational internal controls Create an audit program to achieve audit objectives related to revenue Analyze audit reports for appropriately communicating the result of the audit process Devise a sampling program for the audit universe to formulate field activities Prompt For this assessment, you should assume you are on the internal audit staff of a publicly traded company. Choose one of the following companies: Walmart, Target, Sears, Kroger, or Amazon. You will be required to obtain the last two years' worth of financial statements and a recent audit report. The internal audit group at the company is tasked with preparing for an upcoming revenue audit and analyzing the business risk internally to mitigate audit findings. You will conduct an internal audit of the company using the information gathered and create a report. Then, you will prepare appropriate memos analyzing the audit report you have prepared, while offering feedback and recommendations. Specifically, the following critical elements must be addressed: I. Procedures and Field Work: For this part of the assessment, you will begin your audit report using the information you have gathered to address the following elements pertaining to procedures and field work. A. Describe how you would conduct the audit process, incorporating the analytical procedures you would use to investigate selected business transactions. 1. What steps will you take to review the company's business transactions? 2. What would your plan be to utilize these procedures? B. Explain the appropriate field work needed to review high-risk business transactions for cash and revenue. 1. What would you need to do in the field to investigate these? 2. Could you convey this information through charts or other supporting documentation? C. Create a test to assess appropriate assertions for designated high-risk business transactions. II. Risk Factors: For this part of the assessment, you will continue your audit report using the information you have gathered to address the following elements pertaining to risk factors in all the major business transactions. A. Analyze the income statement for any potential risk factors and compliance issues with Generally Accepted Accounting Principles (GAAP) or International Financial Recording Standards (IFRS). B. Analyze the risk factors and compliance issues with GAAP or IFRS on the balance sheet. C. Using the internal control, analyze the cash and revenue for potential risk factors. 1. What risks need to be documented? 2. How does this information compare to the company or industry averages, or the company's past performance? D. Explain the audit universe and how you identified it. E. Based on your analysis of risk, devise a sampling program for the audit universe. F. Choose the most preferable audit testing procedures that could be used in the field, based on the audit universe items sampled in this situation. III. Memos: For this part of the assessment, you will use your audit report to prepare memos to upper management. 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. Milestones Milestone One: Draft of Procedures and Field Work (Section I) In Module Three, you will submit a draft of the procedures and field work required for conducting your audit process. Describe how you would conduct the audit process for the company you have chosen, including the analytical procedures you would use to investigate selected business transactions. Explain the appropriate field work needed to review high-risk business transactions for cash and revenue and create a test to assess appropriate assertions for designated high-risk business transactions. This milestone is graded with the Milestone One Rubric. Milestone Two: Draft of Risk Factors (Section II) In Module Five, you will submit a draft of risk factors as identified for all of the major business transactions conducted by your chosen company. Analyze the income statement, balance sheet, and cash and revenue for any potential risk factors and compliance issues with Generally Accepted Accounting Principles (GAAP) or International Financial Recording Standards (IFRS). Based on your analysis of risk, devise a statistical and judgmental sampling program for the audit universe. Recommend the most preferable audit testing procedure based on the audit universe items sampled. This milestone is graded with the Milestone Two Rubric. Milestone Three: Draft of Memos (Section III) In Module Seven, 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. This milestone is graded with the Milestone Three Rubric. Final Submission: Audit Report with Memos In Module Nine, you will submit your audit report with memos offering feedback and recommendations. It should be a complete, polished artifact containing all of the critical elements of the final project. It should reflect the incorporation of feedback gained throughout the course. This submission is graded with the Final Project Rubric. Deliverables Milestone One Two Three Deliverable Draft of Procedures and Field Work (Section I) Draft of Risk Factors (Section II) Module Due Three Grading Graded separately; Milestone One Rubric Five Graded separately; Milestone Two Rubric Draft of Memos (Section III) Seven Graded separately; Milestone Three Rubric Final Submission: Audit Report with Memos Nine Graded separately; Final project Rubric Final Project Rubric Guidelines for Submission: Your audit report with memos must be 8-10 pages in length including report and supporting documents (plus a cover page and references). Use double spacing, 12-point Times New Roman font, and one-inch margins. 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 Procedures: Describe Exemplary Meets \"Proficient\" criteria and description demonstrates keen insight into how to conduct the audit process while also incorporating analytical procedures (100%) Proficient Describes how the audit process would be conducted, incorporating analytical procedures for selected business transactions (90%) Procedures: Explain Meets \"Proficient\" criteria and provides a flowchart or supporting documentation describing the high-risk business transactions (100%) Explains the appropriate field work needed to review high-risk business transactions for cash and revenue (90%) Procedures: Create Factors: Statement Factors: Sheet Creates a test to assess appropriate assertions for designated high-risk business transactions (100%) Meets \"Proficient\" criteria and makes cogent connections to the relationship between revenue and accounts receivable (100%) Meets \"Proficient\" criteria and provides keen insight into the risk factors present in the balance sheet (100%) Analyzes the income statement for any potential risk factors or compliance issues with GAAP or IFRS (90%) Analyzes risk factors and compliance issues with GAAP or IFRS on the balance sheet (90%) Needs Improvement Describes how the audit process would be conducted incorporating analytical procedures for selected business transactions, but description is inaccurate or lacks detail (70%) Explains the appropriate field work needed to review high-risk business transactions for cash and revenue, but explanation is cursory or lacks detail (70%) Creates a test to assess assertions for designated highrisk business transactions, but test is inaccurate or inappropriate (70%) Analyzes the income statement for any potential risk factors or compliance issues with GAAP or IFRS, but analysis lacks depth or detail (70%) Analyzes risk factors and compliance issues with GAAP or IFRS the balance sheet, but analysis lacks depth or detail (70%) Not Evident Does not describe the how the audit process would be conducted incorporating analytical procedures for selected business transactions (0%) Value 7 Does not explain the appropriate field work needed to review high-risk business transactions for cash and revenue (0%) Does not create a test to assess appropriate assertions for designated high-risk business transactions (0%) 7 Does not analyze the income statement for any potential risk factors or compliance issues with GAAP or IFRS (0%) 7 Does not analyze risk factors and compliance issues with GAAP or IFRS on the balance sheet (0%) 7 7 Factors: Control Meets \"Proficient\" criteria and analysis demonstrates a nuanced understanding of how the internal control is utilized in analyzing cash and revenue (100%) Analyzes the cash and revenue of the company for potential risk factors using the internal control (90%) Factors: Explain Meets \"Proficient\" criteria and explanation shows a nuanced understanding of the audit universe (100%) Explains the audit universe and how it was identified (90%) Factors: Devise Devises a sampling program for the audit universe based on the risk analysis (100%) Factors: Procedures Meets \"Proficient\" criteria and demonstrates keen insight into the process used to test the items sampled (100%) Chooses an audit testing procedure that could be used and justifies why it would be preferable for this situation (90%) Memos: Explain Meets \"Proficient\" criteria and uses industry-specific language to establish expertise (100%) Explains any sampling or other audit work that could be done and if the company should pursue the additional work (90%) Memos: Make Meets \"Proficient\" criteria and uses industry-specific language to establish expertise (100%) Makes recommendations to the CFO on how to mitigate potential risk factors for major business transactions identified in the audit report (90%) Analyzes the cash and revenue of the company for potential risk factors using the internal control, but analysis lacks depth or does not reference the internal control (70%) Explains the audit universe and how it was identified, but explanation lacks depth or detail (70%) Devises a sampling program for the audit universe based on the risk analysis, but the documentation of risk lacks depth or detail (70%) Chooses an audit testing procedure that could be used and justifies why it would be preferable, but justification is inaccurate or inappropriate (70%) 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 (70%) 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 (70%) Does not analyze the cash and revenue of the company for potential risk factors using the internal control (0%) 7 Does not explain the audit universe and how it was identified (0%) 7 Does not devise a sampling program for the audit universe based on the risk analysis (0%) 7 Does not choose an audit testing procedure that could be used nor justify why it would be preferable (0%) 7 Does not explain any sampling or other audit work that could be done and if the company should pursue the additional work (0%) 7 Does not make recommendations to the CFO on how to mitigate potential risk factors for major business transactions identified in the audit report (0%) 7 Memos: Evaluate Meets \"Proficient\" criteria and uses industry-specific language to establish expertise (100%) Evaluates the findings from the audit report from the CFO's point of view (90%) Memos: Develop Meets \"Proficient\" criteria and uses industry-specific language to establish expertise (100%) Develops a strategy to mitigate risks identified in the audit report (90%) Memos: Describe Meets \"Proficient\" criteria and uses industry-specific language to establish expertise (100%) Describes how the company might implement the strategy based on the findings from the audit report (90%) Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format (100%) Submission has no major errors related to citations, grammar, spelling, syntax, or organization (90%) Evaluates the findings from the audit report from the CFO's point of view, but evaluation lacks depth or detail (70%) Develops a strategy to mitigate risks identified in the audit report, but strategy is inappropriate or lacks depth (70%) Describes how the company might implement the strategy based on the findings from the audit report, but description lacks depth or detail (70%) Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas (70%) Does not evaluate the findings from the audit report from the CFO's point of view (0%) 7 Does not develop a strategy to mitigate risks identified in the audit report (0%) 7 Does not describe how the company might implement the strategy based on the findings from the audit report (0%) 7 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas (0%) 2 Earned Total 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. Running head: AUDIT PROCESS AND RISKS Audit process and risks Prof: Bryan Strang ACC 640 Ismail Amar Southern New Hampshire University July 10, 2016 1 AUDIT PROCESS AND RISKS 2 To: The Board of Directors From: Chief Financial Officer. Date: 7/10/2016. Ref: Audit process and risks AUDIT PROCESS AND RISKS An audit process revealed a number of risks associated with the company in its operations. The risks need to be mitigated bore they can strike any potential negative blow to the productivity of Amazon. The risks identified include balance sheet risks, income taxes risks, internal control risks and foreign exchange risks. The company faces interest rate risks when debts incurred by the company at amortized costs are affected by fluctuation of economies hence in the long term the company accrues a high interest rate than previously expected when taking out the loan. Due to the operations of the company in the international market, Amazon has subsidiaries in foreign countries which operate using the foreign currency present in the countries of establishment. Foreign currency is also subject to fluctuation depending on inflation of specific economies. In this manner despite a respectable profit by subsidiaries the net profit may be affected negatively due to the weakness of several operating currencies. The company faces a variety of income tax risks. This is as a result of change in legislation regarding taxes to be paid by corporate entities and the mix in jurisdictions where the AUDIT PROCESS AND RISKS 3 company conducts its business. The laws relate to how companies conduct operations such as making acquisitions, audit related developments and investments. The company is also faced with internal control risks which include revenue risks and cash risks. Revenue risks arise due to government regulation and high cost of sales associated with acquisitions. The cash risks occur when the company depletes its available cash reserves in acquisition of required necessaries. Despite the existence of these risks Amazon has a number of control mechanisms which can be implemented to mitigate the same. To mitigate the risk associated with internal control risks especially revenue the company should estimate costs associated with specific risks and allocate the revenue according to the selling prices at the time. The company should also devise an audit inverse which analyses all the potential risks and creates a sampling program that seeks to address the risks before they occur. The program should place emphasis on GAAP accounting policies which will help detect any potential changes in policies and the projected impacts on the company should they occur. As such the company can be able to mitigate risks such as income taxes risks, foreign exchange risks and balance sheet risks. Regards, Ismail Amar Chief Financial Officer. Running process: AUDIT PROCESS 1 Audit Process Prof: Bryan Strang ACC 640 Ismail Amar Southern New Hampshire University July 10, 2016 AUDIT PROCESS 2 The company at any given time in the financial year has to audit its books or receive auditors from the federal government or the IRS to make sure that its accounts are in order. The review process describes and outlines any potential risk factors that Amazon is likely to face. In this regard, an audit process is required, and the risk factors need to be recognized before the actual audit process. The audit process is a process of gathering specific information and formulating a report for the outcome resulting from the process. As such it involves some steps all which add up to the audit process. The auditing process beginning with the request for the financial documents of the company. The company such as Amazon is informed of an upcoming audit to get the documents in order when the actual time arrives ( Cohen & Wright, 2002). The auditors then formulate an audit plan by reviewing the financial documents of the company and evaluating the risk factors present within the company. The auditor reviews all the documents and decides on how to conduct it. The auditor then schedules a meeting with the senior management staff to review the scope of the audit. At the meeting a time frame is determined and employees ensured they are available for any interviews with the auditor. The auditor then proceeds on to conduct his or her fieldwork where he or she reviews the internal policies and procedures relating to the finances of the company. This is done through the conduction of interviews with relevant employees of Amazon. The auditor ten formulates his audit report where he or she lists the audit findings, any mathematical errors present and any risk factors that arose during the audit process. The auditor then sets up a scheduled meeting with the senior management where he or she presents the AUDIT PROCESS 3 findings of the audit report. At the meeting the management either agrees or disagrees with the findings of the report and comes up with ways of addressing any issues contained in the report. The audit process can recognize a number of risks within the company. The Amazon Company is faced with a number of risks which include interest rates risk, foreign exchange risks, income taxes risks, balance sheet risks and internal control risks. The risks all have mechanisms to address them in order to ensure the productivity and continuity of the company. Identification of the risks enables the management of Amazon to come up with adequate strategies to combat the risks and ensure the company moves forward. Such strategies include the formulation of the audit inverse to ensure the accounting principles with regard to policy are anticipated together with any risks such as foreign exchange risks and income tax risks. Amazon can also allocate revenue with regard to present selling prices in the market to combat internal controls risks of revenue. AUDIT PROCESS 4 References Cohen, J., Krishnamoorthy, G., & Wright, A. M. (2002). Corporate governance and the audit process. Contemporary accounting research, 19(4), 573-594