ACC 640 Final Project Guidelines and Ru
ic
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 co
ect 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 population to formulate a testing strategy
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
eport you have prepared, while offering feedback and recommendations.
Specifically, the following critical elements must be addressed:
I. Procedures: 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.
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?
XXXXXXXXXXHow would you determine the high-risk business transactions?
B. Explain the appropriate procedures needed to review high-risk business transactions for cash and revenue.
1. What would you need to do 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).
B. Analyze the risk factors and compliance issues with GAAP 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 population and how you identified it.
E. Based on your analysis of risk, devise a sampling program for the population.
F. Choose the most preferable audit testing procedures that could be used, based on the 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(Section I)
In Module Three, you will submit a draft of the procedures 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
procedures needed to review high-risk business transactions for cash and revenue and create a test to assess appropriate assertions for designated high-risk
usiness transactions. This milestone is graded with the Milestone One Ru
ic.
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). Based on your analysis of risk, devise a statistical and judgmental sampling program for the population. Recommend the most preferable audit testing
procedure based on the items sampled. This milestone is graded with the Milestone Two Ru
ic.
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 Ru
ic.
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 Ru
ic.
Deliverables
Milestone Deliverable Module Due Grading
One Draft of Procedures (Section I) Three Graded separately; Milestone One Ru
ic
Two Draft of Risk Factors (Section II) Five Graded separately; Milestone Two Ru
ic
Three Draft of Memos (Section III) Seven Graded separately; Milestone Three Ru
ic
Final Submission: Audit Report with Memos Nine Graded separately; Final project Ru
ic
Final Project Ru
ic
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
eferences). Use double spacing, 12-point Times New Roman font, and one-inch margins.
Critical Elements Exemplary Proficient Needs Improvement Not Evident Value
Procedures: Describe
Meets “Proficient” criteria and
description demonstrates keen
insight into how to conduct the
audit process while also
incorporating analytical
procedures
(100%)
Describes how the audit process
would be conducted,
incorporating analytical
procedures for selected
usiness transactions
(90%)
Describes how the audit process
would be conducted
incorporating analytical
procedures for selected
usiness transactions, but
description is inaccurate or
lacks detail
(70%)
Does not describe the how the
audit process would be
conducted incorporating
analytical procedures for
selected business transactions
(0%)
7
Procedures: Explain
Meets “Proficient” criteria and
provides a flowchart or
supporting documentation
describing the high-risk
usiness transactions
(100%)
Explains the appropriate
procedures needed to review
high-risk business transactions
for cash and revenue
(90%)
Explains the appropriate
procedures needed to review
high-risk business transactions
for cash and revenue, but
explanation is cursory or lacks
detail
(70%)
Does not explain the
appropriate procedures needed
to review high-risk business
transactions for cash and
evenue
(0%)
7
Procedures: Create
Creates a test to assess
appropriate assertions for
designated high-risk business
transactions
(100%)
Creates a test to assess
assertions for designated high-
isk business transactions, but
test is inaccurate or
inappropriate
(70%)
Does not create a test to assess
appropriate assertions for
designated high-risk business
transactions
(0%)
7
Factors: Statement
Meets “Proficient” criteria and
makes cogent connections to
the relationship between
evenue and accounts
eceivable
(100%)
Analyzes the income statement
for any potential risk factors or
compliance issues with GAAP
(90%)
Analyzes the income statement
for any potential risk factors or
compliance issues with GAAP,
ut analysis lacks depth or
detail
(70%)
Does not analyze the income
statement for any potential risk
factors or compliance issues
with GAAP
(0%)
7
Factors: Sheet
Meets “Proficient” criteria and
provides keen insight into the
isk factors present in the
alance sheet
(100%)
Analyzes risk factors and
compliance issues with GAAP
on