Financial Report Audit Reliable Printing †Myassignmenthelp.Com

Question: Discuss About The Financial Report Audit Reliable Printing? Answer: Introduction Through this assignment we would be doing a in depth analysis of the case study of a printing company named Reliable Printing Ltd. Basically we would be dealing with the financial reports for the period that is ending on 30th June 2015. I would be dealing this assignment as a senior auditor with the Rogers Brown who have recently taken up the auditing from Jones Associates. Reliable Printing Limited or RPL deals in variety of products and they print magazines, books etc on print on demand basis. They also have extended their business to maximize their earnings by having publishers titles available as searchable e-books that could be downloaded directly by readers from RPLs web site. Now being the auditor there are few questions that needs to be answered which are related to financial reports auditing. This will provide us with a real life insight into auditing and financial reporting. As part of your planning process, you are considering whether you will need to use the services of an expert in the audit of RPL. After reading and doing an in depth analysis of the case study given, I find it very important or necessary to use the services of an expert in the audit of RPL as part of the planning process. The services of an expert in the audit will provide stability to the auditing and financial reporting of the organization with strict adherence and compliance to the standards set by their respective bodies (Ashton). Thus more transparency and specialization will be available which would help in managing things in a much better management. This would thus be very beneficial for the working as well as reputation, earnings etc of the organization. An expert in the audit committee of the organization would ensure that all the accounting, auditing, law, taxation rules and regulations are strictly abided by and thus a proper reporting would be done. It would also be beneficial for bringing about changes very effectively and with ease. Timely inspections and check are done by the experts and accordi ngly changes and reports are developed (Graham). An expert can be well aware of the changes happening even in the external environment and weigh the pros and cons of it and accordingly can plan regarding the future actions and courses. William Jackson, the CEO of RPL, has requested that the tests of controls only be performed once (due to the disruption caused by audit staff to the work of the staff in the printing and shipping department). In financial, he has requested that the tests of controls occur only during July 2015, as this is traditionally the quietest time of the year for RPL. You expect the audit report to be signed on 15 August 2015. This is a really good move by the CEO as it would ensure a onetime check in the end. This would not disrupt or disturb the working on a regular basis and would enhance the productivity and performance of the organization. The test of controls should be done at the year end to get an overview of the entire year all at once and it has also been observed over the time that it would be the quietist time of the entire financial year (Georgiades). It would thus also not hamper the working much. This should be followed by the other auditing procedures as well all at once in a stretch so that the auditing reports and ready and signed by 15 August 2015. For each of the manual and IT application control activities identified in question 7.28 inChapter 7, design an appropriate audit procedure to test that control. For the manual and IT application activities the best audit procedure to test their control would be sampling and random checking (Apostolou and Alleman). This is due to implementation of the annual policy of tests of controls. There will not be much time to check each and every transaction and activity in details. Thus it would be a nice solution to introduce sampling and random checking. Few transactions from each group must be chosen and evaluated to ensure their accuracy and efficiency. This is also very efficient as there specialization in every field and with an expert who looks into the day to day transactions. Thus it also reduces the chances of errors and mistakes and increases the efficiency and effectiveness of the auditing procedure selected or designed. For each of the audit procedures you described in (a), outline the result you would expect if you determined that the control activity was not reliable. In the above paragraph I stated random checking and sampling as the two auditing procedures to be viable for the organization. If the control activity was determined to be non reliable the results that would be expected to be that major mistakes that do not occur frequently would be missed and not taken into account (Hatherly) . The smaller the sample size would be the more is the chance of mistake. Random checking would also not ensure that all the transactions and activities are monitored with equal weight age or importance. This can lead to error in calculation and measurements. Thus there can be accounting errors like omission, double posting etc. In the IT application area there can be software bugs and mistakes that can be left unnoticed and thus can lead to wrong outcomes and results in the reports. Ignoring considerations of limitation of scope, discuss the effects of Williams requests on the sufficiency and appropriateness of the audit evidence to be gathered. According to Williams request would be very beneficial for the organization as it incorporates an internal auditing committee and body that would ensure specialization and continuous check and control on the day to day transactions and events which would bring more stability and accuracy to the organization. Also the appointment of expertise would ensure more specialization and accuracy (Kremer). The auditing reports gathered would be sufficient and appropriate enough as due to specialization there would be very few chances of mistakes and thus the evidences collected through sampling and random checking would give us a correct and appropriate overview without much mistakes and errors. Review the sample supporting control accompanying the book and identify any control deviations that would be revealed by your tests of controls. The sampling supporting control would be very beneficial for the organization and would help us to provide us with adequate auditing evidences with the best overview of the financial transactions. This would thus be beneficial for the organization to prepare an error free more or less accurate financial and audit report. There is very few chances of any control deviations to be revealed by the test of controls (Ricchiute). Only those errors and mistakes would not be identified whose occurrence is not very common and is not traceable through samples. These mistakes are special in nature with very few occurrence possibilities. Describe how generalized audit software could be used to test sales cut-off at year end. The sales have to invoice in the system before 27Th June as the warehouses are kept closed from 28-30th June. All the sales have to be in transit and be on its way to the delivery. The audit software can be used to test sales cut-off at the yearend very effectively (Robertson). It can be used for measuring and calculation of the year end stock and thus the sales can be calculated accordingly. The average weighted method or the FIFO principle should be used and a consistent inventory policy should be followed. This would ensure proper and efficient evaluation of inventories and thus can be used to test the sales cut off at the yearend very effectively and efficiently. Conclusion Through ts assignment we saw on how auditing a very important part in preparing financial reports is. Auditing requires expertise and specialization and internal audit control is very effective to ensure day to day monitoring and adherence and compliance to the rules and standards. Different auditing techniques and procedures and evidences should be evaluated according to its pros and cons and respectively and the best suited should be applied consistently. References Apostolou, Barbara, and Francine Alleman. Internal Audit Sampling. Altamonte Springs, Fla.: Institute of Internal Auditors, 1991. Print. Ashton, Robert H. Research In Audit Decision marketing. Vancouver, B.C.: Canadian Certified General Accountants' Research Foundation, 1983. Print. Georgiades, George. Audit Procedures. Chicago, Ill.: CCH, 2006. Print. Graham, Lynford. Internal Control Audit And Compliance. Print. Hatherly, David J. The Audit Evidence Process. London: A. Keenan, 1980. Print. Kremer, Boris. Audit. Luxembourg: Casino Luxembourg, 2001. Print. Ricchiute, David N. Auditing. Cincinnati, Ohio: South-Western College, 1995. Print. Robertson, Jack C. Auditing. Homewood, IL: BPI/Irwin, 1990. Print.