Audit Design Program Iii

In: Business and Management

Submitted By KnightRyder87
Words 1179
Pages 5
Audit Design Program III
Tonya Gaines
ACC 546
March 4, 2013
Michael De Marco

Audit Design Program III During phase III of the audit plan, Anderson, Olds & Watershed (AOW) will focus on two important cycles: Inventory and Warehousing Cycle and the Cash Cycle. There are six classes of transactions in the inventory and warehousing cycle: process purchase orders, receive raw materials, store raw materials, process of goods, and store finished goods and ship finished goods. Cash account is a part of every cycle except inventory and warehousing. Cash is primarily important and extremely vulnerable to fraud that is why auditor needs to be careful in the assessing risks in auditing cash account. Anderson, Olds & Watershed’s (AOW) responsibility is to conduct a fair and unbiased audit. We will conduct these tests and procedures according to PCAOB auditing standards. There is not absolute assurance that all misstatements or errors will be discovered.
Inventory and Warehouse Cycle The audit of the inventory and warehousing cycle is designed to test inventory counts, processes and operations. The classes of transactions in this cycle includes sales, value of inventory, cost of goods sold, sales returns and allowances and estimates of allowance for slow moving inventory. The table below displays the interrelationship of the transactions related to audit objectives, tests of controls, and substantive test of transaction that should be approved during the audit process of Apollo Shoes, Inc.

|Transaction- Related Audit Objectives |Tests of Controls |Substantive Tests of Transactions |
|Existence: Inventory as recorded on tags exists|Select a random sample of tag numbers and |Observe whether movement of inventory takes |
| |identify the tag…...

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