Overview
In this assignment, you will utilize the skills learned in the last several units to evaluate a company’s annual report.
First, select an annual report for a publicly traded corporation using EDGAR. If you have trouble locating an annual report, you can use this guide to help.
Once you have located the annual report, address the following questions and discuss your findings. Please answer the questions in essay format, not question-and-answer.
- What is the name of the publicly traded company, year of the statement, and your reason for choosing this firm?
- Who was the auditor of the firm? What was the audit opinion, such as an unqualified opinion, based on the audit report’s findings?
- What makes the audit report date so significant? How does it relate to the audit work and the audit procedures? Briefly discuss the relevance.
- What is a subsequent event? Provide at least two examples.
- Did the audit report include any critical audit matters? If so, how were they resolved? Explain.
- Share your thoughts on the analytical procedures used to audit revenue-related accounts. What duties are involved in the examination of the revenue process? How should those duties be segregated among individuals?
- Describe how control risk is related to some of the key substantive procedures used within auditing. How is control risk managed?
- Would you recommend that companies switch audit firms every few years for internal control purposes? Why or why not?
- Assuming the firm’s balance sheet reflects inventory, what specific types of documents are used to record the inventory management process? Provide at least two examples.
- In addition to the procedures assessed above, explain the inherent risks relevant to both the purchasing process and inventory process. What are the most common inherent risks? Provide at least two examples.
- What types of transactions within the human resource (HR) management process could impact financial statement balances and accounts? In what way can internal controls be assessed, if any?
- Finally, now that you have a more thorough understanding of the audit report and the various procedures and steps involved in the process, reflect on how your chosen company complies with such processes. Do you have faith in the way the firm is conducting its annual audits? Do you believe it utilizes internal auditing activities on a regular basis? What recommendations, if any, would you share with the firm’s chief financial officer (CFO) in terms of future audit planning?
Your completed response must be at least four pages in length, and you must use at least two relevant academic sources in addition to your chosen report, at least one of which must come from the CSU Online Library. Any references used must be cited and referenced in APA Style.
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Your audit client, Nickelson Corporation, a private company, requests that you conduct a feasibility study to advise management of the best way for the firm to utilize computer equipment and which computers best meet the firm’s needs. You are proficient in this area and accept the engagement. After completing your examination, the firm accepts your suggestions and installs the computers and related equipment that you recommended.
Address each of the following questions related to this scenario:
- Explain the impact that accepting this engagement would have on your independence in expressing an opinion on the financial statements of the Nickelson Corporation.
- Digital Inc, a local printer of data processing forms, occasionally offers a commission for recommending Digital Inc, as a supplier. The client is informed of, and recommends you accept the commission. Would taking the payment with the client’s approval be appropriate? Explain why or why not. What internal controls would be violated, if any? Discuss.
- Which financial statements could possibly be affected by such an agreement? Would this information need to be disclosed? What audit risk might potentially be present in such a situation?
- Explain the four general stages in an audit-related legal dispute, and discuss whether this scenario is in violation of the first stage. Why, or why not?
Your journal submission must be at least two pages in length, and you must use at least your eTextbook as a reference. Other references may be used as needed. Any reference used must be cited and referenced in APA Style.