• Internal Code :
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  • Subject Name : Auditing

A Memo to Jack Higgins, the Audit Senior at Oscar Edwards Vance (OEV)

DATE: 9th May, 2020

TO: Jack Higgins,

FROM: John Peter

SUBJECT: Advising range of findings related to various clients of OEV

I am happy to respond to your request about suggestion on client’s performance at assessments of different companies. The current condition of Eyans, Bryer and Smutz Pty limited is quite better than before. But some measures need to be acknowledged before any further delay. So here are some reports I have collected from respected countries and my advices on their progress.

Audit Srategies at Evan Limited

The assumption is that internal audit is often necessary in bigger, more dynamic organizations and that they will just not have the cost / benefit of an internal audit feature there. This may, however, be a rather short-sighted inference, especially when considering the large number of transactions and the regulatory enforcement problems facing insurance companies. I conclude that, before ignoring the need for internal audit, the management at Evan Ltd ought to take a deeper look at three crucial considerations related to risk reduction and internal controls: management's obligation for internal regulation, internal audit's position in performing that duty and benefits of internal audit

Internal Control

Internal supervision, also referred to as administrative regulation, involves, in the broadest context, the management's operational strategy, strategies and practices implemented to achieve the tasks, priorities and objectives.

Due to the high risk involved with buying goods from suppliers, good internal controls are required.

The auditor will first recognize the high buying risks in an enterprise and then search for main measures that would reduce such risks to appropriate standards. Where checks are incomplete or insufficient, the warehouse manager will conduct thorough testing due to the high risk aspect of the transaction

Strength and Weaknesses

Having now expressed the duty of management for internal controls and how internal audit may play a role in assisting management in performing that obligation, let's look at several particular advantages that an internal audit mechanism may give Evan Ltd. and its managers The purpose of the internal audit shall be determined by the management or the board (not an external agency or an adversarial entity) Internal audit reports directly to the management or the board (not an external agency or an adversarial entity) Strengthens the organization's 'control climate' Rendering the company process-dependent rather than person-dependent Exposes redundancies in organizational and control pro

  1. Robust physical protection as in doors, alarms, cameras and restricted access to valuables of your company.

  2. Clearly specified work duties and obligations for machinery operators

  3. Separated duties of the employees, particularly in the handling of capital. If warehouse manager is liable for managing all the money from collecting it to depositing it in the fund, you take a huge risk that it will be poorly managed.

Risks involved with the Buying Feature Include:

  1. Procurement order details my is inaccurate – goods, numbers, or other information related to the order may be improperly reported by the account payable clerk

  2. Illegal transactions may be produced – Machinery operators might compel the organization to buy wood over which they have no jurisdiction

  3. Buying processes may be defrauded or otherwise

Audit Strategy

The system should be customized to the form of materials and services acquired by purchasing during audit preparation – for example: purchasing raw wood differs from finished furniture which differs from services.

  1. Buying role is carried out in compliance with the policies and procedures.

  2. Of the administration. Purchasing is safely, reliably and cost-effectively performed.

  3. Buying feature serves the company's best interests in having the highest quality commodity at the lowest price

The auditor would consider the buying method and its connection to the other areas of the framework of procurement.

All Documented buying processes will be checked to find all possible existing or unusual vulnerabilities in operation that could have emerged from the usage of obsolete document.

Bryer Limited

Checking payroll expenses during an audit includes sniffing out paying staff that may not have been compensated, and checking that legitimate employees are paid the correct sum. Auditors will always verify that payroll expenses are recorded in the right reports on the financial report. You need to check claims of the company financial statements during the examination. Such assumptions check for payroll cost transactions:

Occurrence: Checks event whether the payment transfers really happened. Ensure that the organization reports payroll costs and payroll tax expenditures are for the workers that live and operate throughout the pay period. Often, on balance sheet day, both accumulated payroll and payroll tax obligation balances will reflect sums owed by the organization. To check this statement we must execute two procedures on a routine basis:

  • Checking for fired staff: Pick a list of terminated workers from the company and track them back to the payroll ledger and make sure that no terminated employees are compensated,

  • Verifying details regarding current hires: Pick a list of workers recruited during the year under examination. Examine the staff records to insure that each new hire has sufficient paperwork according to the human resources protocol to policy manual of the audit company

Accuracy: Exactness checking examines if transfers are error-free. For payroll, the sum charged and the account classifications will be reviewed to ensure sure they are accurate.

Double-check Personnel Records Search into the payroll record on a quarterly or yearly basis to verify that you have the right Social Security Information in the register, that the first and last names have been registered properly and that the employee's addresses are accurate and up to date. As standard practice, this information should be gathered from every employee when you hire them.

  • Classify staff appropriately ensuring sure you get your workers categorized correctly is also critical. Are they corporate employees, or are they independent contractors? Do they qualify for overtime, or not?

  • Use Right technology; the technology can be your best friend when it comes to ensuring precise payroll. And when paired with the correct time management tools it is even simpler to handle the payroll.

  • Employees will be able to log their hours with the click of a button rather than using paper timesheets (which can be time consuming to fill out and are more likely to result in errors). Look for a time tracking software that allows your employees to track time from their mobile device and submit their hours via an app, especially if you have a team working on the road or in a number of different places.

Smutz Pty Limited

As auditors, we conduct revenue auditing by checking various audit statements like frequency, completeness, consistency and cut-off. Of such assumptions, the event will generally be the most relevant assumption as content profit misstatement attributable to overstatement rather than understatement.

Having had an idea of how Nathan is building up internal revenue management is very useful for auditors to adapt the realistic audit procedures to tackle the potential threats that may arise. The main internal controls that auditors will look at are mainly linked to the authorization of rates, the method of distribution of services, the method of reporting sales, the process of billing and correction.

  1. Completeness: This point involves the fullness of the financial reporting report. The missing revenue report may exist due to several specific factors, including the structure and method of the company, which could not collect all sales, mistakes and theft at times.

  2. Occurrence: The auditor should consider assessing whether the revenues actually occurred during the period. There is a risk that recorded revenues may not have occurred.

  3. Accuracy – this means no errors occurred while preparing documents or posting transactions to ledgers. Reference to correctly calculated and defined documents ensures the statistics and statements are not misunderstood.

Related check – the re performance of estimates on invoices, salaries, etc., and the analysis of reconciliations of control accounts are meant to provide evidence of consistency.

If you like to discuss any of these ideas, please give me a call. Also if you decide to apply the recommendations, I would like to serve as a helping hand to you.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Auditing Assignment Help

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