ACC492 University of Phoenix Audit Procedures for Fixed Assets Paper Also need done in Excel. I have attached an example of the excel sheet. Consider and

ACC492 University of Phoenix Audit Procedures for Fixed Assets Paper Also need done in Excel.

I have attached an example of the excel sheet.

Consider and discuss the specific risks and nature of Barnes & Noble and create comprehensive work programs for the Equipment (Fixed Assets).

Submit a 500- to 700 -word document that includes the following:

Audit steps for tests of controls, balances, transactions, analytical procedures, etc. as well as other considerations such as sample size and sample methodology.
A brief summary page should be included in this document, 525 to 700 words, for each of the audit programs. Include in this summary specific financial information gleaned from the current Form 10-K used to perform an analysis of work program steps. For example, if the team noted significant swings in the Fixed Assets balance year-over-year, identify these swings, and how you address them in your work program (this is in essence an audit procedure – analytical review).

Respond in 100 words

Christine Burton

The goal in the auditing of accounts payable is the assessment of the financial records for complete accuracy. It is also to identify areas that have potential for improvements of the internal controls and different ways to reduce fraud. An audit program is an audit plan or action plan that will explain the procedure that will be followed by the auditor. For an audit test for the notes payable that will be:

Recognize the clients-it is important to know the client before the audit starts
Business risk assessment-these will be risks associated with errors in the financial statements that could lead to failure
Distressing notes payable-all business face inborn risks that relate to accounts payable, to reduce such risk, an audit should prepare the definite procedure for notes payable.
Setting of acceptable misstatement
Assessing the control risk for the notes payable
Tests should be designed and performed for control and acquisition of capital
Selecting the sample of the noted paid and tracing of payment of interest expense with the general lender account
Recalculation of sample of paid notes for the period in which the audit is being conducted
Samples taken for receipt of notes payable with the bank statement

This applies to my chosen organization because I actually do most of these steps every month at month end and twice a year an auditing company comes in and does a more thorough job. I will take all invoices and match them up to payments and will also use the bank statements to see what payments have cleared and verify that the amounts match up.

Talesha Alexander

Respond in 100 words

Audit tests of notes payable have four main objectives and they are to determine whether the internal controls over accounts payable are adequate, there was a proper authorization and was recorded properly for all transactions fro principles and interest involving notes payable, liability for notes payable and interest expense are properly stated and disclosures related to notes payable and related expense are in accordance with the four presentation disclosure audit objectives. Before a note can be issued, it must go through a board of directors to give the proper authorization. No note should be issued without authorization. When a note is due, there should be an automatic issued to pay for the note as soon it is due. This is having adequate control of the prepayment of principles and interests. Once a note is paid, there should be proper documents saying it is paid and it should be canceled and put in the hands of somebody of authority. Lastly, there should be a periodic independent verification. which simply means that the detailed notes record should in reconciled with the general ledger. Barnes & Nobles
Cash Testing
Year Ended 2018
Scope: All Cash accounts
Purpose: The purpose of this test is to the reasonableness of the cash account balance at 4/28/2018
Step
Audit Procedures Description
1
Timing
Obtain an understanding of types of accounts and internal controls around cash accounts
Phase 1
Inquire of management if there’s any cash restrictions, compensating balances, and classification
of cash.
Obtain a listing of all cash account that includes nature of account, authorized signers, check
writing capabilities and currency.
2
3
based on the listing and review of Bank reconciliation & bank statements at 4/28/18, the
general ledger activity of the account determine whether a bank balance is considered
significant for testing based on the following criteria:
a. The nature and materiality of the account balance.
b. The volume of transactions processed through the account.
c. The number of items outstanding as of the period end.
d. Whether the account was opened or closed during the period.
e. The likelihood the financial institution would have entered into a financing
arrangement with the entity since the prior year.
Select a sample of all bank accounts and obtain a sample of monthly bank reconciliations and
verify that they are properly prepared, reviewed and approved timely.
Phase 1
Phase 2
For accounts determined to be significant confirm the cash account balance as of April 28, 2018
directly with the 3rd party bank
4
if confirmation not return perform alternative procedures such as watching the client log into
their online bank website and have them pull up the balance per the website
agree the confrimation to the bank reconciliations.
Phase 3
5
Obtain bank reconciliations for bank accounts as of April 28, 2018
Foot bank reconciliations.
Reconcile bank balances with 3rd party confirmation
Reconcile bank balances with general ledger
obtain a detail of deposits in transit and outstanding checks, foot and agree to bank
statement
Review outstanding check listing and deposit in transit listing for stale or long outstanding
items.
Phase 3
6
Obtain the April 2018 and May 2018 bank statements
Agree 4/28/2018 balance to the bank reconciliation bank balance
for each disbursement account perform a test of detail over checks that cleared the bank on
May 2018
Trace deposits in transit including transfers to the subsequent bank statements and the
deposit slip to determine appropriate cutoff
Phase 2
7
8
9
10
Inquire with management of any interbank transfers/checks within the last week of April. Also,
review bank reconciliations and subsequent bank statements for transfers between bank
accounts that did not clear during the same period (not applicable to transfers between bank
accounts within the same financial institution) and determine that all transactions have been
properly accounted for.
For each disbursement account, obtain numbers of last checks written and compare to first
check written on the subsequent check register used for testing in accounts payable to obtain
assurance as to accuracy of cutoff and that they are in sequential order.
Review classification of accounts as cash equivalents. Cash equivalents would include only those
investments with original maturities (i.e., remaining maturity at the date the entity acquired the
investment) of three months or less.
Evaluate the results of testing and conclude on the balance as a whole
Phase 2
Phase 2
Phase 4
Phase 4
good audit program
Purpose
Understanding of Entity
Understanding of Entity
Test Controls
Test EO, C, RO
Test C, EO
Test C, EO
Workpaper
Reference
Who
Date
Who
Date
Completed Completed Reviewed Reviewed
Test C, EO
Test C, EO
Test PD
Test PD
Barnes & Nobles
Financial Instruments Testing
Year Ended 2018
Scope:
Purpose:
Step
1
2
3
4
5
6
7
7
9
10
All financial instruments other than Cash
The purpose of this test is to the reasonableness of the Financial instruments balance at 4/28/2018
Audit Procedures Description
Obtain an understanding of types of accounts and internal controls and policies for Financial
Instruments surrounding the initiation, authorization, processing, fair value measurement, and
disclosure of investment activities
Timing
Phase 1
Select a sample of investment accounts and obtain a sample of monthly bank reconciliations and Phase 2
verify that they are properly prepared, reviewed and approved timely.
Obtain an investment rollforward the includes the following detail. Foot and cross foot
rollforward. Tie investment income and the beginning and ending balances to the trial balance.
a. Beginning Balance
b. Purchases
c. Sales
d. Unrealized/Realized gains
e. Interest Income
F. Ending Balance
Phase 2
Obtain a schedule of all investments securities. The schedule should detail the following
a. Description of each instrument, with applicable details, Name, Ticker/Cusip, Number of
share, Maturity, Interest rate, Acquisition (trade) date, Industry classification,
Investment type
b. Cost and, separately, unamortized premium or unaccreted discount
Phase 2
c .Fair value & source of pricing
d. Fair value hierarchy level under ASC 82
e. Carrying basis (cost, fair value, equity method, hedging instrument, cash equivalent
Foot Schedule and agree to the trial balance
Confirm the investment balance as of April 28, 2018 directly with the 3rd party bank
If confirmation not return perform alternative procedures such as watching the client log into
their online bank website and have them pull up the balance per the website
Agree the 3rd party confirmation to the investment rollforward.
Select a sample of individual investments and test the following:
1. Agree the price per the Investment detail to a 3rd party pricing source such as the Nasdaq
or NYSE
2. Classification of the investment.
3. Fair value hierarchy level under ASC 82
Obtain a schedule of all purchases and sales of investments, foot the schedules and tie them to
the investment rollforward
a. Select a sample of investment purchases for testing. Trace to broker’s advice noting
date of purchase, CUSIP, description, principal, or number of shares/contracts, price paid,
and other relevant matters
Phase 3
Phase 2
Phase 2
Phase 2
b. Select a sample of investment sales for testing. Trace to broker’s advices noting date of
sale, CUSIP, description, principal of number of shares/contracts, sales price, and other
relevant matters and recomputed the gain/loss and determine that the gain/loss has
been properly reflected in the income statement.
Review classification of accounts as cash equivalents. Cash equivalents would include only those
investments with original maturities (i.e., remaining maturity at the date the entity acquired the
investment) of three months or less.
Evaluate the results of testing and conclude on the balance as a whole
Phase 4
Phase 4
good audit program
What is being tested?
Determining the effectiveness
of the internal controls put in place by
Barnes & Noble
Test Controls
Detail tie-in
Detail tie-in
EO, C, RO
VA, PD
Detail tie-in
Workpaper
Reference
Who
Date
Who
Date
Completed Completed Reviewed Reviewed
Detail tie-in
Test PD
Test PD
Barnes & Nobles
Sales Revenue
Year Ended 2018
Scope: All Sales Transactions for the year ended 4/28/2018
Purpose: The purpose of this test is to the reasonableness of sales revenue for the year ended 4/28/2018
Step
1
Audit Procedures Description
Obtain an understanding of the revenue recognition policy of the Company.
Also discuss with management what Barnes and Nobles internal controls are related to
recording sales transactions
Perform walkthrough of the controls discussed with management.
2
Perform a risk assessment over sale with the objectives including: occurrence, completeness,
accuracy, posting and summarization, classification, timing
3
Based on the control understanding Select a sample of transactions and obtain a supporting
backup to verify that they are properly prepared, reviewed and approved timely. And evaluate
is the control is operating effectively
Obtain a detail of Sales transactions, foot it and tie it to the trial balance
Select a sample of transactions to Vouch to supporting documentation includes, sales receipt,
Shipping documentation, Cash receipt etc. to test the following
4
Transaction occurred
Transaction is recorded in the proper period
Revenue is recorded in line with the Barnes and Noble revenue recognition policy
Transaction is recorded at the proper amount
5
6
7
Vouch a sample of sales transactions from the AR detail utilized in AR testing to verify that the
sales detail is complete
Perform gross profit analytic of Sales revenue to determine the reasonableness of the account.
Evaluate the results of testing and conclude on the balance as a whole
good audit program
Timing
What is being tested?
Phase 1
Understanding
Phase 1
Risk Assessment
Phase 2
Extent of testing controls
Phase 2
E, C ,VA
Phase 2
C
Phase 2
C & VA
Phase 4
PD
Who
Completed
Date
Completed
Who
Reviewed
Date
Reviewed
Barnes & Nobles
Sales Revenue
Year Ended 2018
Scope: All AR balances at 4/28/2018
The purpose of this test is to the reasonableness of the Accounts Receivables balance for the year
Purpose: ended 4/28/2018
Step
Audit Procedures Description
Obtain an understanding of Barnes and Nobles internal controls are related to recording accounts
receivables
1
Also obtain an understanding of managements estimates included in the AR balance including
Perform walkthrough of the controls discussed with management.
Perform a risk assessment over AR with the objectives including: occurrence, completeness, accuracy,
posting and summarization, classification, timing.
2
Inquire with management at to any adverse changes that could results in changes to the Net realizable
value of individual balances and the account balance as a whole.
3
Obtained a detailed aged accounts receivable schedule at 4/28/2018, foot it and tie it to the trial
balance.
4
Vouch a sample of transactions from the Sales detail utilized in Sales testing to verify that the AR Aging
is complete.
Review the aging for any balances that are individually significant. Indications of individually significant
are the following:
Significant credit balances in accounts receivable.
5
Employee, officer, director or shareholder receivables.
Related party receivables (complete the Related Party Balances or Transactions section of this
program).
Foreign receivables
Non-current receivables.
If receivable is individually significant, the auditor would obtain the sales invoice, shipping documents,
and subsequent cash receipts.
Select a sample for confirmation from the aged accounts receivable listing.
For Each Sample selected prepare a confirmation to confirm with the party who owes Barnes and
Nobles the amount due, due date, and any related interest on the receivable.
The Auditor should control the sending and receiving of the confirmation requests.
6
Reconcile and evaluate all confirmation replies including nonresponses, oral responses, and exceptions.
Perform alternative procedures for all nonresponses.
6
Alternative procedures include vouching cash receipts subsequent to the confirmation date and
examination of sales invoices, shipping documents, and customer contracts/customer purchase
orders.
Consider whether nonresponses, oral responses, or exceptions are indicative of a risk of material
misstatement, fraud, or deficiency in internal control.
7
Perform analytical procedures over accounts receivable by performing the following
Performing a trend analysis of the ratio of receivables to sales/revenue.
8
9
Obtained the Detailed AR aging as of the date of fieldwork and compare to the 4/28/2018 AR detail.
Investigate any material balances that are overdue and determine if they are collectible or if the
allowance for doubtful accounts is reasonable.
Perform analytical procedures over the allowance for doubtful accounts by performing the following
Performing a trend analysis of the ratio of allowance for uncollectible accounts as a percentage of
accounts receivable
Performing a trend analysis of write-off of uncollectible accounts as a percentage of total accounts
receivable
Perform analytical procedures over the Sales return allowance f by performing the following
Compare sales returns subsequent to year end to the allowance at 4/28/2018
9
Performing a trend analysis of the ratio of Sales return allowance as a percentage of Sales
Performing a trend analysis of sales return as a percentage of total accounts receivable
10
Evaluate the results of testing and conclude on the balance as a whole
good audit program
What is being tested?
Timing
Phase 1
Understanding
Phase 1
Risk Assessment
Phase 2
Detail tie-in
Phase 2
C
Phase 2
EO/PD
Phase 2
EO/CO/A
Who
Date
Who
Date
Completed Completed Reviewed Reviewed
Phase 2
EO/CO/A
Phase 3
C & VA
Phase 3
VA
Phase 3
RO, C, VA
Phase 3
RO, C, VA
Phase 4
PD

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