Need to summarize this under COSO within the risk assessment.

AS #8 A part of the planning process for this audit was to assess the audit risk. As per Auditing Standard #8, it is important to take audit risk into consideration when conducting an audit of financial statements and the internal controls. The audit risk is the risk that the financial statements are materially incorrect, even if the audit opinion states that the financial reports are free of any material misstatements. To form an appropriate basis to express our opinion on the financial statements of Palace Entertainment, we needed to obtain reasonable assurance on whether the financial statements were free of material misstatement due to error or fraud. In order to obtain reasonable assurance, we had to reduce audit risk to an appropriate low level. As part of the planning process for the audit of Palace Entertainment, we decided to meet quarterly. Meeting quarterly helped us figure out where we would focus. We had to decide which were the highest risks to focus on. Using last years audit as a guide, we had multiple things we wanted to look at. We wanted to consider all aspects of the company. Things to consider were: Mergers Customers Assets Revenue Sources Locations Vendors Regulatory/Laws Payroll Technology After looking at these considerations, we felt that the COSO Model would help us with the risk assessment of the internal controls and financial statements. AS #9 We want to plan our audit out so that the audit is conducted effectively. It is important to begin our audit of Palace Entertainment with various plan activities. We plan to gain knowledge on as much of the company as we can to ensure that appropriate attention is on important areas. In order to perform our auditing plan we first have to look into various planning activities. The nature and extent of the planning activities depend on the size and complexity of the company, our previous experience with the company, and also any changes that occur during our audit. Then we focus around deciding what activities are important to the company's financial statements and internal controls over financial reporting. We chose to specifically look into the areas of vendor's, legal, payroll, revenue recognition and assets in order to identify where any of the potential problems may be. To audit these five areas we will look into the matters relating to the industry in which the Palace Entertainment operates, legal or regulatory matters of which the company is aware of, and the company's organization, operating characteristics, as well as capital structure. Based off of these various activities plus others we are able to develop and document a plan that includes the nature, timing, and extent of the risk assessment and the controls and substantive procedures. Our plan will help with the proper staffing and work assignments and also guide the development of the rest of the planning phase of the audit. AS #15 It was very important that before performing the general activities required for the audit, that we established requirements regarding the design and performance of the audit. This allowed us to make sure all evidence obtained was appropriate and sufficient. We tested the evidence to make sure that what we collected supported and corroborated management's assertions regarding the financial statement or internal controls. We needed to make sure that our opinion had a reasonable bias and was sufficient enough in accordance with Auditing Standard #15. The seven characteristics of competent evidence include: Relevance--to the audit objective that the auditor is testing; Independence of the provider-information received from outside the entity is presumed to be more reliable than from inside the entity. AS #11 Another part of the Audit Planning process is using the Auditing Standard #11 to start considering materiality. Taking materiality into account during the planning phase is important because it is just not an equal threshold that is spread throughout the company like 5%. Materiality is the amount that a company finds valuable however if it is under the materiality threshold once established it is not valuable enough to the company and there is no need for them to consider it during the audit fieldwork stage. Determining materiality involves the exercise of professional judgment. Factors that may affect the identification of an appropriate threshold include the elements of the financial statements which would be assets for Palace Entertainment. Also, where the items on the financial statements tends to be focused which would be profit, revenue and assets. In our case of Palace Entertainment, we would plan to use the Payroll to establish a materiality and use of Assets. We need to determine the performance of materiality for purposes of assessing the risks of material misstatement and determining the nature, timing and extent of further audit procedures. In planning this audit for palace entertainment, we need to make a judgment about the size of misstatements that will be considered material. Place Entertainment has a payroll system like all other companies but a few things to take into consideration with materiality is there are many different employees and positions being paid at different rates. Which means once a threshold is established for materiality then looking for anything above that amount will be key and would also serve as finding fake employees within the park. Also, making sure that the hourly workers time sheets are reported is important because of how big the company is. Along with Payroll they have a lot of assets within Palace Entertainments. The rides are the biggest assets and having a materiality threshold for them is very important. Not only that but cash on hand and cash handling is a big part of the company because of the tickets being sold. Having a threshold to audit based on materiality is key because people could be stealing the money. Overall Materiality is a very important key factor to identify during the fieldwork stage to make sure the company is on track and not losing copious amounts of money or materials. AS #12 Part of the planning process for this audit was to review risk ratings and any relevant testing already performed in previous audits. As per Audit Standard #12, it is important to establish requirements regarding the process of identifying and assessing the risk of material misstatement of the financial statements. In order to decide what areas are important as possible audit areas, we must consider internal and external factors that affect the company, along with the company's organizational structure. During the previous audit, vendors were an area of concern, but due to other aspects of the company having higher significance and a higher likelihood of misstatement, the audit group did not focus resources on vendors. However, this year the audit group does not want to overlook this aspect of the company again. Because vendors are a large component of the company's payroll, it is important to ensure that there is no misstatement in payroll or purchase to pay. Since this is an integrated audit, it is important to focus on both the financial statements and the internal controls over the financial statements. Because of the size and complexity of this company, it affects the magnitude of the risks and requires the proper internal controls to be in place to handle them. Vendors are important to the company in the following areas: maintenance, food and beverage, and asset acquisition. The vendor master file is a crucial piece of evidence for the audit. It is paramount to ensure that there are no red flags in relations to any of these vendors