Audit Report Assignment

Instructions (Activities you will perform to help you write your assignment report):

• Select a public company
• Access the financial statements for a recent year (2013 or later) from Edgar or through the SEC filings on the Companys website
• Note risk factors described in 10K
• Select specific areas/functions/accounts (examples: Sales, Receivables, Payroll, Procurement, Inventory, Investments, Treasury operations etc.) that you would audit in your internal audit. You can choose a maximum of two areas. [Choosing the cycle(s) (example: Sales and Collections, Acquisition and Payment, Payroll and Personnel, Inventory or Warehousing, Capital Acquisition, Cash and Financial Instruments) could help you in selecting the area/function for internal audit].
• Identify a total of four controls, in the specific areas/functions/accounts you selected, that should have been existing and working effectively. Your audit reveals that the controls were either not designed well or were not working. This will result in the hypothetical findings you will include in your audit report
• Determine the recommendations you would like to make on each of the four issues.
• Imagine yourself as the management and decide the action plan to correct the issue identified
• Determine to whom the Audit Report would be submitted
• See below for the assignment to be submitted

KnowledgeLeader has a number of sample audit reports in various areas. Many reports are also available on internet. Do not cut and paste. Complete the assignment using use your own language.

The contents of the two parts of the assignment should be:

Part 1 - Analysis

• Introduction
• Company Background: Include briefly information on industry, main products, major financial statement items etc. Provide the link to the financial statements.
• Audit Areas/Functions for Internal Audit: Indicate the areas/functions selected (maximum 2) for internal audit and your rationale for selecting them [you can use the risk factors as stated in 10K (include page #) or you can give your own reasons which should be well substantiated]
• Internal Controls: List the control objectives for the selected areas/functions and describe a total of four internal controls that should be existing and working effectively in the selected areas. The controls can be distributed in the two areas you had selected.
• Audit procedures: Describe the audit procedures you would perform to test the controls. Briefly describes the steps. The resultant issues (four in all) will be described as Audit Observations in the Audit Report along with Audit Recommendations and Management Responses/Action Plans.
• Addressing the Audit Report: Describe to whom you will address the Audit Report

Part 2 Audit Report

Audit Reports come in many formats. You can choose any format. However, the report should include at the minimum, the following:

• Should be appropriately addressed
• Executive Summary (include an overall Audit Opinion and the rationale)
• Detailed Audit Report
  • Background
  • Objectives of audit
  • Scope of Audit
  • Audit approach (How the audit was performed)
  • Audit Observations, Audit Recommendation(s) and Management Responses/Action Plans, for each observation. The Observations should have risk ratings.