I chose Amazon has my company. We are an internal audit group at the company is

Question

I chose Amazon has my company.

We are an internal audit group at the company is tasked with preparing for an upcoming revenue audit and analyzing the business risk internally to mitigate audit findings. You will conduct an internal audit of the company using the information gathered and create a report. Then, you will prepare appropriate memos analyzing the audit report you have prepared, while offering feedback and recommendations.

Explain the appropriate field work needed to review high-risk business transactions for cash and revenue, and create a test to assess appropriate assertions for designated high-risk business transactions.

Create a test to assess appropriate assertions for designated high-risk business transactions and why would you pick this kind of test? please explain

Explanation / Answer

The aim of the risk assessment auditing standards was to improve the quality and effectiveness of audits by substantially changing audit practice. Statements on Auditing Standards nos. 104–111 provide increased rigor to the audit process in a number of key areas including the assessments of inherent and control risks and the linking of these risk assessments to further audit procedures.

auditors, at their discretion, to simply designate the client’s internal control as a high risk, which allowed them to greatly reduce the effort required to understand and document internal control.

The risk assessment standards prohibit the auditor from “defaulting to the maximum” control risk. On all audits the auditor should evaluate the design and implementation of internal control to properly identify and assess risk.

shareholder with Kerber, Rose & Associates, sums up the fundamental dilemma her firm’s auditors face. “Our staff struggles with understanding how internal control is relevant,” she says. “They need to relate it to something.”

The secret is for the auditor to gain a deeper understanding of the COSO integrated framework of internal control, according to Charles Landes, AICPA vice president–Professional Standards and Services. “COSO addresses the issues faced by Karen and the staff at many other firms because it relates internal control to the financial statements,” he says.

To apply what Landes refers to as “the COSO process,” the auditor starts at the highest level of aggregation, the financial statements. The auditor then proceeds through a sequence of analyses that become increasingly granular until he or she ultimately assesses individual control activities.

Most auditors understood that the risk assessment standards would require them to perform more audit procedures than in the past, and they were prepared to incur significantly higher costs during the first year of implementation. The expectation was that in subsequent years, costs would decline because auditors would leverage their knowledge of the client obtained in prior audits. In practice, realizing these savings has been difficult as auditors have struggled to determine the nature and extent of the procedures they should perform on an ongoing basis.

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