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Audit Planning and Control It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms...

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Audit Planning and Control

It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS).

Use the Internet to select a public company that appeals to you. You may also use the company dossier in theNexi Unidatabase to find company information.

Imagine that you are a senior partner in a public accounting firm hired to complete an audit for the chosen public company.

Write a 4–6 page paper in which you:

  1. Outline the critical steps inherent in planning an audit and designing an effective audit program. Based upon the type of company selected, provide specific details of the actions that the company should undertake during planning and designing the audit program.
  2. Examine at least two performance ratios that you would use in order to determine which analytical tests to perform. Identify the accounts that you would test, and select at least three analytical procedures that you would use in your audit.
  3. Analyze the balance sheet and income statement of the company that you have selected and outline your method for evidence collection which should include, but not be limited to, the type of evidence to collect and the manner in which you would determine the sufficiency of the evidence.
  4. Discuss the audit risk model and ascertain which sampling or non-sampling techniques you would use in order to establish your preliminary judgment about materiality. Justify your response.
  5. Assuming that the end result is an unqualified audit report, outline the primary responsibilities of the audit firm after it issues the report in question.
  6. Use theStrayer Libraryto locate at least two quality academic resources in this assignment. Note: Wikipedia and other similar websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

  • This course requires use of newStrayer Writing Standards(SWS). The format is different than other Strayer University courses. Please take a moment to review the SWS documentation for details.
  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow SWS or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Answered Same Day Aug 18, 2021

Solution

Harshit answered on Aug 29 2021
150 Votes
For the purpose of this assignment the company selected is Nike Inc. Nike is an international corporation engaged in the business of footwear, apparel, accessories and equipment and the support services. As per the accounting and auditing standards as provided by the government, the external auditor has to devise a plan to conduct the audit of such organization.
1. In the planning stage of an audit, the main area is to decide and fix a level of risk of material misstatement after the assessment of risk of the company. This is done by the regular trend analysis and after discussion with the management, the level of materiality if fixed. The inherent steps in the planning stage are as follows:
· Appointment: The Company and the auditor, both should verify that by any clause, the auditor is not allowed to conduct the external audit of the concerned company. If there is no provision which stops the company to audit such company, the auditor can move ahead with the planning of the audit.
· Assessment of Risk: On the basis of the audit conducted in the previous years, the company estimates the level of risk or material misstatement below which the auditor would ignore the misstatements.
· Audit Plan: The approach for the audit along with the team who would conduct the audit that is the engagement team and the company should be ready with the documents as required.
· Conduct of audit: The auditor after the above should start of the audit, based on the information of the company as received by the auditor in the initial stage. And the level of risk estimated on a timely basis
Based on the audit plan as received by the company, Nike should get the primary books and preparation of the financial statements ready based on the plan as received by it.
2. The performance ratios are the ratios which are used to evaluate the performance of the company and hence the analytics could be performed on the company. The following two performance ratios are calculated for the chosen company that is Nike Inc.
Asset turnover ratio = Net sales / Total Assets
= $37,403 / $31,342
= 1.19.
This shows that the company is able to generate more profit from the assets and using such assets, making the assets turnover positive greater than 1.
Net profit Ratio = Net Profit / Sales * 100
= 2539 / 37403
= 6.8%
This reflects that the company is able to generate the net profit of 6.8% which is a good start and the performance of the company can be analysed.
The company, Nike is...
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