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look at the files attached and Add to your memo from Milestone  2-3  page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it specifically relates to this company and industry.

Describe the audit data or evidence your team will review. Why is this proof important?

What if a significant portion of the data is overseas and beyond the auditors’ jurisdiction or audit universe? Analyze how the audit team will

compensate for that risk. What governing rules and regulations must be taken into consideration?

Describe analytical procedures you will use to determine the sampling program. How will your internal control evaluation affect this step? Be

specific.

List and then describe the types of audit evidence you will request from the company.

Describe any considerations your team will make in auditing subjective areas, including any governing rules and regulations that were factored

into the auditing decisions.

Describe the factors you took into consideration when planning the nature and extent of the audit documentation.

Describe how responsibility for IT (computers, software, internet usage, databases) risk coverage for companies in the IT industry is defined. Is it

adequate? Describe how that definition addresses or fails to address current and future risks related to social media.

Describe the internal controls that are put in place to specifically protect computer data and proprietary information. How well do these

controls operate within the IT industry?

Where do current and future vulnerabilities exist for IT, and what must be done to manage these gaps? [

make sure you add references and

look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it
ROBBINS NETWORK SERVICES INTERNAL CONTROL 0 To: Manager From: Davis Johnson, VP Risk Management. Subject: Internal Controls Cc: Board of Directors Date: November 10, 2021 The significant financial business transactions of the company: Business transactions are vital to understanding various aspects of an organization, particularly those related to its internal control systems. Robbins Network Services (RNS) core finance business activities and transactions entail providing and installing software, networking hardware, and computers for clients. The organization also offers consultation services to other firms regarding information technology. Furthermore, to boost success, RNS utilizes services from experts with technical knowledge to provide much-needed operations. Since the organization seeks to remain competitive in the industry, it presents different products and services. For this reason, Robbins Network Services requires ensuring they give customers the most desirable services and products in a timely way. Evaluation of business risks associated with this company: Business organizations usually experience a wide range of perils that might limit the successful execution of business opportunities. Similarly, RNS experiences specific risks that delay its effective operation in the industry. First, potential downturns linked to the US economy are a significant peril RNS may undergo in its business. According to Zeman, economic downturns create a substantial threat to business transactions and activities (2019). Secondly, RNS encounters increased predatory pricing initiated by competitors eyeing a larger market share, which impacts the company’s potential to reach new customers. Furthermore, RNS also experiences high marketing expenditures that do not present expected outcomes regarding reaching more potential clients. Spending increased amounts of financial resources on inefficient processes is a risk that can affect the business (Akisik and Gal,2017). This explains how poor internal control systems that present unproductive advertising can hurt a business organization. Additionally, RNS also experiences other risks, including credit losses and software development operations’ generation of unsustainable products. In this sense, such business risks are a core threat to company activities, and RNS must work on sorting them out. The appropriate types of internal controls: Successful organizations attribute their long-term prosperity to various firm aspects, including internal controls. adequate and practical internal controls are crucial in operational success (Iwejor,2017). For this reason, RNS requires robust internal controls to boost its activities. First, RNS should focus on implementing duty separation as an internal control. A distinction of duties provides an opportunity for each active personnel to execute specific assigned tasks, such as auditing, reporting, deposits, and bookkeeping. Secondly, RNS requires access controls for its accounting system. The access controls are significant because they allow each accounting system to utilize certain logs to enable only authorized individuals. Thirdly, assets’ physical auditing is a critical internal control that can contribute to successful changes at Robbins Network Services. Physical audits are vital since they provide accurate information concerning inventory and cash, which puts the company in a transparent position. Another notable internal control for RNS involves utilizing 7-day trial balances, which entail double-entry records ascertaining that the firm’s debit records are equal to entries on the credit side. These internal control systems can help boost RNS operations.  Ethical issues involved with company and industry  Ethical issues are a normal part of the business world and understanding them is essential to ensure a business avoids them. RNS faces ethical concerns that it must sort out to operate smoothly in the industry. To begin with, manipulation of figures in the accounting and finance departments is a moral concern that can lead to the fall of a business organization. For instance, derivative manipulation played a central part in the fall of Enron, which is a crucial ethical issue. (MacCarthy,2017). For this reason, RNS must avoid such issues and ensure that its accounting department records essential and relevant details. Another notable moral concern, in this case, entails confidentiality issues. Undesirable maintenance of confidential data and information can lead to leaks, which affect the firm negatively. Thus, the company must avoid these ethical issues for better business outcomes. Current events for their impact on this company’s risk and internal control in the future: One significant event that might impact RNS’ internal controls and firm risk includes advanced technologies. According to the Wall Street Journal businesses require new internal controls due to technological advancement. As an illustration, artificial intelligence and automation change how companies operate, prompting business organizations to implement new internal controls, particularly those working on software aspects. Additionally, the current COVID-19 pandemic has a significant influence on internal controls and company risk. According to Zhu and Song, the outcomes of the pandemic on internal controls can create problems for firms. Thus, the changes and consequences must be assessed to ensure RNS stays ahead of the changing business circumstances (2021). References Akisik, O., & Gal, G. (2017). The impact of corporate social responsibility and internal controls on stakeholders’ view of the firm and financial performance. Sustainability Accounting, Management and Policy Journal. Iwejor, I. C. (2017). Internal controls: Identifying control elements and implementation dynamics facing retail companies (Doctoral dissertation, Walden University). MacCarthy, J. (2017). Using Altman Z-score and Beneish M-score models to detect financial fraud and corporate failure: A case study of Enron Corporation. International Journal of Finance and Accounting, 6(6), 159-166. The Wall Street Journal. (2020). Advanced Technologies Call for New Internal Controls. Retrieved from https://deloitte.wsj.com/articles/advanced-technologies-call-for-new-internal-controls-01581624126 Zéman, Z. (2019). New dimensions of internal controls in banking after the GFC. Economic Annals-XXI, 38. Zhu, P., & Song, J. (2021). The Role of Internal Control in Firms’ Coping with the Impact of the COVID-19 Pandemic: Evidence from China. Sustainability, 13(11), 6294.
look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it
Assume you are an auditor at an accounting firm. Your team is getting ready to start a financial audit of Robbins Network Solutions (RNS). You will start with the initial review and audit preparation. You know the following information about RNS. Objectives of the Engagement Audit of the financial statements for the year ended December 31, 2017. Business and Industry Conditions RNS sells and installs computers and networking hardware and software, and provides information technology consulting to businesses. It is currently developing its own computer networking software to sell to customers. RNS’s success depends on attracting and retaining personnel with a high level of technical expertise who are able to provide a broad range of services. The market for staff is highly competitive. The market for computers and networking products is extremely competitive. RNS’s main competitors are companies like Dell, Hewlett Packard, and Apple. RNS also competes with local and regional resellers that provide similar products and consulting services directly to customers. To be competitive, RNS has relied on its ability to provide its customers with state-of-the-art products in a timely manner. Because the company does not have the buying power of some of its competitors, it generally must charge a higher price for its products, but it is also able to provide a higher level of service and expertise to its customers to compensate for the higher price. The market for computer products and technology services is sensitive to economic conditions. Economic indicators predict the U.S. economy will be relatively stagnant for the next few years, with the annual growth in spending for information technology products and services expected to be 1 percent per year for the next three years. In the past year, RNS has decided to increase sales by relaxing credit rules to provide credit to customers with slightly higher credit risk. Ownership and Management RNS is a closely held company owned by six stockholders. Two stockholders are active members of the company’s board of directors. None of the other owners take an active part in the management of the business. Objectives, Strategies, and Business Risks RNS’s primary business objectives are to increase sales, services, and consulting revenues by five percent and increase net income by seven percent each year for the next three years. Strategies to achieve those objectives include:   New software development   Aggressive marketing of products and services through increased advertising   Sales to customers with a higher credit risk profile The primary business risks associated with the company’s strategies include the following:   The U.S. economy may suffer a significant downturn.   Competitors may engage in predatory pricing to gain market share.   Increased advertising expenditures may not produce desired results.   Credit losses may exceed the benefits of increased sales.   Software development activities may not generate viable products. The company has developed the following responses to these risks:   Frequent monitoring of economy and industry conditions   Monitoring of competitor actions   Hiring of a marketing consulting firm to evaluate the performance of advertising methods   Daily review of aging of accounts receivable   Adherence to a controlled software development budget Measurement and Review of Financial Performance Management uses the following measures to monitor the company’s performance:   Inventory and receivables turnover   Aging of accounts receivable   Sales and gross margins by type of revenue   Net income   Total inventory balance
look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it
Millstone 2 -Audit Program – Internal Controls for Cash 0 Audit Program Plan               Robbins Network Services has established itself well with business owners that have clear roles and responsibilities for all members. However, evaluation to ensure internal controls for cash are stable is necessary. External controls components such as political temperature and governance get not considered as they are out of reach of the management (Nouri and Gilaninia, 2017). Internal decision-making processes are the most vital elements in the success of a business. Therefore, this paper will create an audit for the internal controls of cash for RNS and ensure gaps and inconsistencies get revealed. First, I will do a walkthrough that includes documented policies and procedures for account receivables and company treasury policies and bank statements.   The program will run for one year, and each month of the year will get dedicated to specific activities in the internal control components. Understanding the background of the business, its suppliers, customers, and stakeholders will ensure the organizational culture gets captured (Yang et al., 2019). They will be taken if the business utilizes information technology software and application to achieve its cash management objectives. Reviewing transactions for the RNS entity’s particular period is vital to ensure accurate future earnings. The five people involved in running the day-to-day activities at Robbins Network Services should understand that their roles and responsibilities depend on their attitude towards the business. When reviewing cash reports, integrity and ethical values are needed (Sitcha et al., 2019). If there are gaps and discrepancies in the business’s cash flow, the oversight roles of the five active owners require them to investigate it. If the other stakeholders realize that the five owners are not accountable for managing cash, then the business continuity probability for RNS will be below. The company also has foreign currency translation that requires a distinct audit process for cash receipts. We can review ASC Topic 830, Foreign Currency Matters, to determine how to audit those. This procedure involves using a computer “and reviewing a statement of cash flows by allocating changes in cash flows from the effects of foreign-currency rates among individual cash flow line items” (Spencer & Richards, 2012).  Information and Communication             In January, communication strategies will get reviewed. The first activity will ensure periodic external reviews get reported through the proper channels. Communication at all levels of an organization plays an integral part in ensuring cash management processes are understood. At RNS, the five active owners should reach out to the stakeholders when new technologies increase transparency and accountability get found (Nouri and Gilaninia, 2017). In the second month of February, remediation and challenges experienced in the previous year will be reviewed. Internal check systems resilience should be evaluated to prevent downtimes that might negatively affect cash management. Fraud in cash management is the most common problem in many businesses; SOX provides an official channel to report these. Risk Assessment             In March, risk assessment activities will be done. Balance sheet management techniques will be evaluated. Cash transactions have many risks associated with them that many businesses will need an accounting system to alert them of any inconsistency. In the past, many businesses depended on an auditor who would manually analyze financial transactions and books, but today automation has made it easy to see errors (Yang et al., 2020). The main objective of RNS was to ensure recorded financial transactions were consistent with the objectives of risks management. In April, risks assessment procedures will also ensure fraudulent activities are flagged. The significant risk that RNS can experience is an overstatement of payments. The five owners are responsible for setting risks assessment procedures that will deter the theft of cash and make sure who has access to a cash account.  Control Activities             In June, control activities will be carried out. Accounting recording techniques will be tested, and parameters to assess the effectiveness of cash management techniques will be analyzed. The tools that help RNS achieve its mission statement are vital for the success of a business. In July, cash payment journals will be utilized, and if cheques paid and invoices figures do not match, transactions can be flagged. The cash management systems will be operational by August, making it easy to obtain cash balances from financial institutions (Samadara et al., 2021). If the cash management auditing tools such as reconciliation software do not meet the needs of RNS, then losses are inevitable. In September, the audit will still be in the control activities as investigations to the payments paid to business partners will be evaluated. Gaps get expected, although the disclosure of cash held will be accurate. If explanations and reviews are provided for suspicious payments, the audit will proceed to other internal control components. Maximum utilization of resources remains a top priority.   Control activities are vital in cash management techniques as many of the tools applied might not respond to essential cash elements such as invoices and paid cheques. Therefore, preparing a report on the evaluation of bank statements will be the final say on whether ethical standards in the business have been maintained (Sitcha et al., 2019). If there is a need to involve authorities if fraud gets seen, the management will decide. A single employee should only manage the receipts book; otherwise, inconsistencies will tamper with the records’ accuracy.   Monitoring Activities             In November and December, monitoring activities will get planned and implemented. Achievement of organizational objectives will be the main parameter that will measure performance (Sitcha et al., 2019; Yang et al., 2020). Communication with the recruitment department is needed to ensure organizational development programs at Robbins Network Services meet the needs of the industry. The gaps in cash management will be tackled at this stage. References Chen, H., Yang, D., Zhang, J. H., & Zhou, H. (2020). Internal controls, risk management, and cash holdings. Journal of Corporate Finance, 64, 101695. Spencer, S. l, & Richards, G. e. (2012, February 1). Three common currency-adjustment pitfalls. Journal of Accountancy. Retrieved December 11, 2021, from https://www.journalofaccountancy.com/issues/2012/feb/20113891.html. Nouri, S., & Gilaninia, B. (2017). The effect of surplus free cash flow and audit quality on earnings management. International Journal of Economics and Financial Issues, 7(3), 270. Reinamah, C. M., Siahaan, M. Y., & Samadara, S. (2021, April). Design of Accounting Information Systems of Cash Receiving and Expenditure in Improving Internal Control of Income of Weaving Tie MSME in the District South Central Timor. In International Conference on Applied Science and Technology on Social Science (ICAST-SS 2020) (pp. 527-530). Atlantis Press. Wadesango, N., Tinarwo, N., Sitcha, L., & Machingambi, S. (2019). The impact of cash flow management on the profitability and sustainability of small to medium sized enterprises. International Journal of Entrepreneurship, 23(3), 1-19.
look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it
I am giving you more clear faction: The first paragraph you summarize the first to milestone that I added and the second that is “you document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it specifically relates to this company and industry” this need to be a page max! In the other part that need to be another 2.5 pages make sure you cover after looking at the “Final Project Scenario” and touching these areas: Talk about evidence and what kind and why it’s important Supporting claims in financial statements what type of evidence you will use when come to account receivable? fixed asset —no cash! Audit universe (document that details all the audit activities to be carried out by the internal audit function) Talk about entities such as: Intangibles, account payable account receivable fixed asset payroll Revenue that comes from software and computer ext. and what u do if entities come from outside USA consolidate to US cup . out of sea revenue! this is not cash specific we need to talk about analectic procedure, that is key audit technique such as sampling risk, analectic software helps not being bias ext. type of evidence, what is the evidence that is different that the first part this is related to: invoices account reconciliation documentation bank reconciliation AR receivable Inquiry and observation or audit techniques Read only access as auditor Watching inventory count You can rely on verbal statements, but you needed to have document when it comes to Inquiry. External confirmation with AC /AP Subjective areas: Estimate and reserve Management estimate with reserving account receivable methodology you need as auditor need to audit against that methodology (if receivable 90 days outstanding its need to be fully reserve, when they write off the receivable) Good will, intangibles this is areas that Management can have decisions on and by that play around with the books. Show led expenses and reduced bed debt reserve. Documentation Actual support your issue as auditor IT have 4 parts that need to be different Risk of IT such as: Network access, IT GC, backup recovery, change management What is the general risk of control that any organization want to put with IT.? Protecting data such access controls and encryption. vulnerabilities what is that (fishing, cybercrime, virous software, etc.)