Your organization has decided to move forward with the audit of EarthWear Clothiers. As lead auditor, you will select one of EarthWear Clothiers business objectives and create an audit plan of their financial statements. The business objectives are:

- Expand further into the global market by launching internet sites into South American countries

- Increase customer base by introducing a new extreme sports product line to attract younger consumers

- Reduce pricing to be more competitive in the marketplace by seeking out additional vendor relationships to lower costs of goods sold

- Implement an employee stock purchase plan to increase productivity and employee morale

- Reduce delivery and distribution time of products and services by adding additional warehouse locations

Use the information from your preliminary review and auditing standards to support your plan. Using your selected business objective, create an audit plan of the organizations financial statements that addresses the following: business risks, management assertions, audit risk, internal controls, and the effect on audit procedures. Support your plan with the appropriate auditing standards. Also, determine materiality by conducting a preliminary risk assessment, and explain which factors were used in making this determination. You can obtain the ICFR and materiality guidelines on the Willis & Adams website.

Specifically, the following critical elements must be addressed:

II. Planning the Audit: Select one of the organizations business objectives and create an audit plan of the organizations financial statements. Use the information from your preliminary review and auditing standards to support your plan.

A. Using your selected business objective, create an audit plan of the organizations financial statements that addresses the following, and support each with the appropriate auditing standards:

1. Business risks

2. Management assertions

3. Audit risk

4. Internal controls

5. Effect on audit procedures

B. Determine materiality by conducting a preliminary risk assessment, and explain which factors were used in making this determination.

Guidelines and expectations: Below are the business objectives given to you in the Milestone Two Guidelines and Rubric. Business Objectives: Expand further into the global market by launching internet sites into South American countries Increase customer base by introducing a new extreme sports product line to attract younger consumers Reduce pricing to be more competitive in the marketplace by seeking out additional vendor relationships to lower costs of goods sold Implement an employee stock purchase plan to increase productivity and employee morale Reduce delivery and distribution time of products and services by adding additional warehouse locations The assignment asks you to select at least one of the business objectives above (you are welcome to select more than one, but at least one must be selected from the list above) In your submission, you are required to complete several tasks: 1-Create an audit plan of the organizations financial statements In order to create the audit plan, you must pick one of the business objectives above and find the applicable auditing standards. Basically, what are the relevant auditing standards that relate to the business objective that you selected? So, you need to identify what auditing standard(s) are applicable to the business objective you selected. This is an action item for you; it should be documented in an obvious way in your submission. You should state the circumstances for auditing EarthWear (and the business objective you selected) and why the auditing standard(s) is relevant. Do not just state the auditing standard and move on. You need to connect the dots and say why it is relevant. 2-For the business objective that you selected, you must include the following: a-Business risks you have to state explicitly in the paper what the business risks are (i.e., name them) and identify and state the auditing standard that is associated with business risks. A general statement will not work. Again, this is an action item on your part required by the rubric. The business risks must relate to the business objective you selected. b-Management Assertions you have to say what the management assertions are (i.e., you should name them in the paper completeness, accuracy, etc.) and state the auditing standard that is associated with management assertions. Again, this is an action item on your part required by the rubric. This must be obvious in your submission not subtle. The management assertions must relate to the business objective you selected. c-Audit risk you must discuss the audit risk and describe it in the audit plan as well as document what the appropriate auditing standard. You have to state this explicitly in the paper general statements and just citing the auditing standard is not enough. You must tie it to the business objective. d-Internal Controls you must identify the internal controls for EarthWear related to the business objective you selected. This means you must state what those controls are and their connection to the business objective as well as include the appropriate auditing standards. e-Effect on audit procedures you must explain effect on audit procedures for the related business objective selected. You have to explain this effect and the appropriate auditing standard. Again, this is an action item on your part to include in the paper. 3-You must determine materiality. This requires two action items. First, you must conduct a preliminary risk assessment, and explain which factors were used to in making the determination. This is an action item that needs to be in your paper. You need to state what the factors are and your conclusion on the risk assessment. The next action item for you is to use the link on the Willis & Adams website embedded in the Milestone Two Guidelines and Rubric to calculate materiality (this means a calculation).