Analyze external and other factors to identify risk

Assignment Help Accounting Basics

Reference no: EM133855325

In this project, you will demonstrate your mastery of the following competency:

I. Analyze potential risks and audit strategies for an organization

Overview

For this project, you will focus on analyzing potential risks for a client and developing an audit program to assist with testing. The importance of an audit of financial statements and internal/external controls is to add credibility to the reported financial position and performance of a company. The importance of understanding risk and how it affects a company is crucial to the outcome of an audit. The Securities and Exchange Commission requires that all publicly held entities file annual reports that have been audited signifying the importance of the audit process.

Scenario

W&S Partners is a U.S.-based accounting firm with offices located in most major cities. W&S Partners will be conducting the January 31, 2026, audit for Cloud 9 Inc., a publicly traded company. The firm has begun the planning phase of the external audit for Cloud9 and has assigned you the task of preparing for the audit. As part of the risk assessment phase of the audit, you will gain an understanding of Cloud9's internal control structure, financial accounts, business environment, materiality, and any inherent risks that may impact the company. You will also review external and other factors as well as interview data that could impact the audit. This understanding will assist you in developing an audit program and in designing the nature, extent, and timing of an audit program.

Directions

For this project, you will review the Cloud9 Case Study and use select data provided in the Supporting Materials section to perform an analysis of the company data. Areas covered will include internal controls of the company, IT controls, external and other factors that may impact the company, interview transcripts from company staff and other personnel, as well as Cloud9's financial data. Through your analysis, you will identify a minimum of two internal control deficiencies or anomalies (risks) for each of the following: accounts receivable, accounts payable, inventory, and information technology. Next, you will determine audit tests to be performed and internal control recommendations to remediate any risks. You will then research Cloud9's industry and related risks to determine what other controls over financial reporting you would recommend. Finally, you will add any information gathered through your analysis to your Cloud9 Audit Program Template found in the What to Submit area.

Specifically, you must address the following criteria:

I. Analyze financial accounting internal controls to identify risk. Include the following:

A. Lines of business Cloud9 deals with

B. Types of Cloud9 customers

C. Types of Cloud9 suppliers

D. Associated general ledger accounts, including materiality

II. Analyze information technology controls to identify risk. Include the following:

A. IT general controls

B. Company-level and application controls

C. Cloud9's ability to adapt to changing technology

III. Analyze external and other factors to identify risk. Include the following:

A. Laws and regulations that may affect Cloud9

B. Economy and its impact on Cloud9

C. Cloud9's industry

IV. Analyze financial data gathered through data analytics to identify risk. Include the following:

A. Validated notes payable balances

B. Validated inventory balances

C. Timing of revenues to ensure proper period

D. Allowance for doubtful accounts

a. Is it reasonable?
b. How to confirm?

E. Liquidity risk based on ratios

F. Inventory moving based on ratios

G. Customers paying on time based on ratios

V. Create an audit program to address identified risks. Include the following:

A. Recommended audit tests for the audit team to perform

Reference no: EM133855325

Questions Cloud

Describe the ways that professional organizations : PS 558- Describe the ways that professional organizations and other institutions function to promote the values and culture of applied behavior analysis.

Identify and describe the communication technology tool : Identify and describe the communication technology tool. Provide information regarding where people can learn how to access this tool.

She continues to be late for work : Tia is now two months pregnant. She continues to be late for work and was told that if she continues with her lateness she will be fired.

How you can use this information to improve the workplace : In 750 to 1000 words summarize how you can use this information to improve the workplace, while providing legal protections.

Analyze external and other factors to identify risk : Analyze external and other factors to identify risk. Analyze financial data gathered through data analytics to identify risk.

National origin discrimination : If Henry filed a claim against Express Shipping based on National Origin Discrimination, would he be successful? Briefly explain.

Public policy reasons for making retirement policy mandatory : Tony is a 54-year-old veteran of the NYPD. He is told that he must retire by age 55. Explain any public policy reasons for making retirement policy mandatory

Practical investigation of the effects of csr : A practical investigation of the effects of Corporate Social Responsibility on social, environmental and financial performance of the Zimbabwe Mining sector.

Underlying previous court decisions or existing statutes : Courts consider legal principles and policies underlying previous court decisions or existing statutes, fairness, social values and customs, public policy

User Account

All Pages