ACCT3000 Auditing - Assurance and Risk Assessment

Answer:

The purpose of the audit plan is, first assess the risk of the company in order to contribute to the effectiveness of the audit risk assessment and to contribute to the audit assessment.

This memorandum is structured so that planning documentation memo common to all projects is presented. All the items are presented and considered at every item. When a section in the audit plan is not applicable it should be presented as N/A. The risk amendment procedure in this memorandum involves three issues;

Accounting risk: it is the accounting or conversion exposure, which arises when operating with different currencies to those used to formulate the accounting information. For example, the cases of exporting companies that have accounting information in soles but their transactions are made in dollars(Bessis).

Measurement of exchange rate risk 

Recommendation 

All the professionals related to the Audit exercise as well as the businessmen know the vital importance for the success of the business to have an Internal Audit team that responds to the interests of the same and that is an allied factor of the high management of the entity, will ensure the proper administration, use and control of human, material and financial resources. In this article we present important elements related to Internal Audit(Ricchiute 2006).

It should be emphasized that, regardless of the internal auditor's supervision of the performance of the responsibilities delegated by the management to its executives, and of the constant verification of compliance with the existing internal control systems(Saunders and Cornett 2018). Obtaining sufficient and competent evidence to enable it to assess the accuracy of the economic and financial situation presented by the entity and whose results show the financial statements that are periodically issued.

Internal Audit is an activity whose main objective is to examine and evaluate the adequate and effective application of internal control systems, ensuring the preservation of the integrity of an entity's assets and the efficiency of its economic management, proposing to management Corrective actions. 

Responsibilities of the internal auditor 

The Internal Audit is the denomination of a series of processes and techniques, through which it gives a firsthand security to the management with respect to the employees of its own organization, from the observation in the work regarding:
 If the controls established by the organization are properly and effectively maintained. If records and reports accurately and accurately reflect current operations and results properly and rapidly in each department or other unit, and if they are being taken out of the plans, policies or procedures for which the Audit is responsible. 

Internal control classes

The growth of economic activity and the expansion of the business volume have allowed the establishment of large companies, causing a great complexity in the organization and administration of the same, as well as the distance of the business management in the daily control of the operations.

Due to this, the activity of the management of a company, as responsible to third parties (shareholders, financial intermediaries, suppliers, etc.) for the proper management of their interests, is exposed to the risk of not only breaches or deformations In the implementation of the systems of operation and information, but also to a non-timely or misunderstanding of their decisions(Valsamakis, Vivian and Du Toit 2010).

One way for management to have a reasonable margin of assurance that this does not happen or, at least, to minimize this risk is for the company to have an effective internal control system.

A way for the auditor Information about the operation of the internal control of the company will be the investigation, observation, review of accounting and procedure manuals and internal instructions, as well as conversations with executives responsible for certain areas of the organization. It should also study and evaluate existing internal controls as a basis of trust in them and to determine the scope of audit evidence to be performed. To adequately document the evaluation method of the company's internal control system, the auditor May use certain means that can serve as evidence of such an assessment. The most used means are: - The descriptive system This method has some drawback, since many people do not have the ability to express their ideas in writing in a clear, concise and synthetic way, causing weaknesses in the control is not expressed in the description. It can be a method to be used in small companies, where there are no great complexities in the control - Flow diagrams.

How audit plan will be affected

The auditor can choose to describe the procedures and techniques in narrative form, but in most cases, their work is seen Simplified by the use of transaction motion graphics; That is to say, by flowcharts. The flowcharts allow to graphically represent the chain of administrative and accounting operations, specifying what basic documents are used, what services emanate and who are the ones that perform them. It allows to register the flow of information from an original input source, through a series of processing steps, to some output condition or a report for the address(Stephens 2003). Also, through the flow diagram, it is possible to show the separation of duties, authorizations, approvals and internal verifications that take place within the system.- The questionnaires is one of the most widespread methods, which is based on a systematic survey presented under The form of questions referring to basic aspects of the system, and in which a negative response shows an absence of control. This method helps to ensure that all the basics of control are considered. But it has the disadvantage that the questions, being standard models, are rigid, restrictive and often require a general rethinking and do not always allow the auditor to have a clear vision of the system, given how voluminous it sometimes is. The importance of this internal control lies in the fact that the auditor, in large companies, cannot carry out a verification n complete and comprehensive of all documents and operations that have been obtained through sampling and statistical formulas .

References

Bessis, Joe?l. Risk Management In Banking.

Frenkel, Michael, Ulrich Hommel, Markus Rudolf, and Gunter Dufey. 2005. Risk Management. Berlin: Springer.

Hopkin, Paul. Fundamentals Of Risk Management.

Mohseni, Abdolali. 2014. Audit Risk Assessment And Audit Sampling. Saarbru?cken: LAP LAMBERT Academic Publishing.

Ricchiute, David N. 2006. Auditing. Mason, Ohio: South-Western/Thomson Learning.

Risk Management. 2009. Englewood, CO: Medical Group Management Association.

Saunders, Anthony, and Marcia Millon Cornett. 2018. Financial Institutions Management. New York: McGraw-Hill Education.

Stephens, John J. 2003. Managing Currency Risk. Chichester: John Wiley & Sons.

Tweeddale, Mark. 2003. Managing Risk And Reliability Of Process Plants. Boston: Gulf Professional Pub.

Valsamakis, Anthony C, Robert W Vivian, and G. S Du Toit. 2010. Risk Management. Sandton: Heinemann.

Vona, Leonard W. 2013. Fraud Risk Assessment. Hoboken, N.J.: Wiley.