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I NEED ASSISTANCE WITH BOTH PART 2 & PART 3

For your final project for this course, you will assume the role of an auditor at a large accounting firm, preparing to perform an audit of financial records for Robbins Network Solutions (RNS). As with any audit, the audit team is not always going to have access to all the information and resources they want prior to starting and working on the audit. That is real-world auditing. The assignment is intended to mimic what auditors face in their career. Do the best with what you have, using auditing standards and critical thinking. Support all your responses based on the material you have. 

ACC 411 Final Project Scenario 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

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ACC 411 Final Project Guidelines and Rubric

Overview Professional auditors are charged with the responsibility of analyzing internal controls, conducting risk assessments using analytical procedures, and designing and implementing audit programs. The purpose of any audit is to report, analyze, and determine whether a specific entity met the stated goals of the procedures being audited. The audit objectives drive the audit program, the analytical procedures, and the substantive fieldwork done by the audit team. Most people think of financial auditing when they discuss, read about, or are involved with audits because it is the most common type; however, there are many other types of audits. These include performance, government, compliance, and internal audits. This class focuses on financial auditing for the majority of the topics, which requires that auditors possess the skills and abilities to successfully implement auditing standards and procedures. For your final project for this course, you will assume the role of an auditor at a large accounting firm, preparing to perform an audit of financial records for Robbins Network Solutions (RNS). As with any audit, the audit team is not always going to have access to all the information and resources they want prior to starting and working on the audit. That is real-world auditing. The assignment is intended to mimic what auditors face in their career. Do the best with what you have, using auditing standards and critical thinking. Support all your responses based on the material you have. This summative assessment focuses on the preliminary audit assessment, including the drafting of a summary of findings, preparation of an audit program, and evaluation of the relationship between audit risk, audit evidence, and financial statement assertions. The project is divided into two milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three and Five. The final product will be submitted in Module Seven. In this assignment, you will demonstrate your mastery of the following course outcomes:

 ACC-411-01: Explain the use of assurance services in financial reporting

 ACC-411-02: Assess the internal controls of an entity for minimizing risk

 ACC-411-03: Analyze the impact of emerging technologies that could affect auditing

Prompt 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. Refer to the Final Project Scenario document for more information. Specifically, the following critical elements must be addressed. Most of the critical elements align with a particular course competency (shown in brackets).

I. In a concise memo, evaluate the internal controls of RNS.

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A. Describe the major financial business transactions of the company. Include appropriate research to support your answer. [ACC-411-01] B. Evaluate the highest business risks associated with this company. What makes you believe these specifically are the highest risks? Provide

appropriate research or data to support your reasoning. [ACC-411-02] C. What would you suggest are the appropriate types of internal controls for this industry? Why? [ACC-411-02] D. Describe ethical issues involved with this company and industry that would have a direct effect on the outcome of a financial audit. How could

these issues be addressed? [ACC-411-02] E. Analyze current events for their impact on this company’s risk and internal control in the future. Include documentation of these current events.

[ACC-411-02]

II. Write an audit program for internal control of cash in Word or Excel. The following internal control components must be included: [ACC-411-02] A. Control environment B. Risk assessment C. Control activities D. Information and communication E. Monitoring

III. Adding to your memo from Milestone One, document your understanding of the relationship between audit risk, audit evidence, and financial

statement assertions as it specifically relates to this company and industry. A. Describe the audit data or evidence your team will review. Why is this proof important? [ACC-411-01] B. 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? [ACC-411-02] C. Describe analytical procedures you will use to determine the sampling program. How will your internal control evaluation affect this step? Be

specific. [ACC-411-02] D. List and then describe the types of audit evidence you will request from the company. [ACC-411-01] E. Describe any considerations your team will make in auditing subjective areas, including any governing rules and regulations that were factored

into the auditing decisions. [ACC-411-02] F. Describe the factors you took into consideration when planning the nature and extent of the audit documentation. [ACC-411-01] G. 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. [ACC-411-03] H. 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? [ACC-411-03] I. Where do current and future vulnerabilities exist for IT, and what must be done to manage these gaps? [ACC-411-03]

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Milestones Milestone One: Internal Controls In Module Three, you will submit Milestone One. You are starting your audit at RNS and the first step you have to take is evaluating the internal controls of the company. This milestone will be graded with the Milestone One Rubric. Milestone Two: Audit Program In Module Five, you will submit Milestone Two. You will complete your audit program at RNS. This milestone will be graded with the Milestone Two Rubric. Final Submission: Auditing Final Project In Module Seven, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Project Rubric.

Deliverables Milestone Deliverable Module Due Grading

One Internal Controls Three Graded separately; Milestone One Rubric

Two Audit Program Five Graded separately; Milestone Two Rubric

Final Submission: Auditing Final Project Seven Graded separately; Final Project Rubric

Final Project Rubric Guidelines for Submission: Your memo (combining sections I–III) must be a total of 4–6 pages (plus references cited in APA format). Use double spacing, 12- point Times New Roman font, and one-inch margins.

Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value

Internal Controls: Transactions [ACC-411-01]

Meets “Proficient” criteria and demonstrates a nuanced understanding of the major financial business transactions of the company

Describes the major financial business transactions of the company and effectively supports them with research

Describes the major financial business transactions of the company, but does not effectively support the description with research or the description is inaccurate, illogical, or unclear

Does not describe the major business financial transactions of the company and support the description with research

6

4

Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value

Internal Controls: Risks

[ACC-411-02]

Meets “Proficient” criteria and demonstrates keen ability to use research in support of a choice of risk

Evaluates the highest business risk for the company, provides an appropriate rationale for the choice, and supports the choice with data or research

Evaluates the highest business risk for the company, but response lacks a rationale explaining the choice, or supporting research or data or the rationale provided is illogical, unclear, or incomplete

Does not evaluate the highest business risk

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Internal Controls: Controls

[ACC-411-02]

Meets “Proficient” criteria, and suggestions demonstrate a nuanced understanding of internal control and the company environment

Provides an appropriate suggestion for the types internal controls for the company and explains the reasons for the suggestion

Provides a suggestion for the types internal controls for the company but does not explain the reason for the suggestion, or the suggestions or the explanations are inappropriate, illogical, unclear, or incomplete

Does not provide a suggestion of types of internal controls for the company

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Internal Controls: Ethical Issues [ACC-411-02]

Meets “Proficient” criteria and demonstrates a keen understanding of the impact of ethical issues on the outcome of audit

Analyzes the ethical issues that would have a direct impact on the outcome of a financial audit and provides appropriate suggestions for addressing them

Describes ethical issues that would have a direct effect on the outcome of a financial audit but does not provide suggestions for addressing them, or the issues or suggestions are inappropriate, illogical, unclear, or incomplete

Does not analyze the ethical issues that have a direct effect on the outcome of a financial audit

6

Internal Controls: Events

[ACC-411-02]

Meets “Proficient” criteria and analysis demonstrates a keen understanding of the impact of current events of the company’s future risks and internal control

Analyzes current events for their impact on the company’s risk and internal control in the future and provides documentation of current events

Analyzes current events but does not discuss their impact on the company’s risk or internal control in the future or does not provide documentation of current events, or the analysis is illogical, unclear, or incomplete

Does not analyze current events for their future impact on the company’s risk or internal controls in the future

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5

Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value

Audit Program: Internal Control

Components [ACC-411-02]

Meets “Proficient” criteria and demonstrates a sophisticated understanding of the process necessary to audit internal controls for cash

Writes an audit program that effectively and completely addresses all of the components of internal controls for cash including the control environment, risk assessment, control activities, information and communication, and monitoring

Writes an audit program for the internal control of cash, but the program is missing one or more required components, or is inappropriate, incomplete, or unclear

Does not write an audit program for the internal control of cash

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Relationship: Evidence

[ACC-411-01]

Meets “Proficient” criteria and demonstrates a sophisticated understanding of the role of evidence in an audit

Describes the audit data and evidence the team will review and explains why this proof is important

Describes the audit data and evidence the team will review but does not explain why the proof is important, the evidence is inappropriate, or the description is unclear, illogical, or incomplete

Does not describe the audit evidence data the team will review and why the proof is important

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Relationship: Audit Universe

[ACC-411-02]

Meets “Proficient” criteria and demonstrates a sophisticated understanding of the risk that results from a significant portion of data being overseas and outside the audit universe

Analyzes how an audit team can compensate for risk that results when a significant portion of data is overseas and outside the audit universe

Analyzes how an audit team can compensate for risk that results when a significant portion of data is overseas and outside the audit universe, but the suggested method of compensation is inappropriate or the explanation is unclear or incomplete

Does not analyze how an audit team can compensate for the risk if a significant portion of the data is overseas and outside the audit universe

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Relationship: Procedures

[ACC-411-02]

Meets “proficient” criteria and demonstrates a sophisticated understanding of the relationship between the internal control evaluation and analytical procedures used for sampling

Describes the analytical procedures that will be used to determine the sampling program and how the internal control evaluation will affect this step

Describes the analytical procedures used to determine sampling but does not fully, accurately, or clearly explain how the internal control evaluation will impact this step, or the procedures for determining the sampling are inappropriate, incomplete, or unclear

Does not describe the analytical procedures that will be used to determine the sampling program or how the internal control evaluation will impact this step

6

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Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value

Relationship: Types of Evidence

[ACC-411-01]

Meets “Proficient” criteria and demonstrates a keen understanding of the use of evidence in an audit

Lists the types of evidence the audit team will request from the company

Lists the types of evidence the audit team will request from the company, but the evidence is inappropriate or the list is incomplete

Does not list the types of evidence the audit team will request from the company

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Relationship: Considerations of Subjective Areas

[ACC-411-02]

Meets “Proficient” criteria and demonstrates a keen understanding of appropriate considerations when auditing subjective areas

Describes considerations the team will make when auditing subjective areas, including any governing rules and regulations that will factor into audit decisions

Describes considerations the team will but does not explain how governing rules or regulations will factor into auditing decisions, or the considerations are inappropriate, incomplete, or unclear

Does not describe the considerations the team will make when auditing subjective areas or the governing rules and regulations that will factor into auditing decisions

6

Relationship: Factors for Planning

Documentation [ACC-411-01]

Meets “Proficient” criteria and demonstrates a sophisticated understanding of the purpose of audit documentation

Describes factors taken into consideration when planning the nature and extent of the audit documentation

Describes factors taken into consideration when planning the nature and extent of the audit documentation, but the factors are inappropriate or the description is incomplete or unclear

Does not describe the factors taken into consideration when planning the nature and extent of the audit documentation

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Relationship: Responsibility for IT

[ACC-411-03]

Metes “Proficient” criteria and demonstrates a sophisticated understanding of necessary IT risk coverage for the organization

Describes how IT risk coverage (computers, software, internet coverage, databases) is defined in the IT industry, whether the coverage is adequate, and how it addresses (or fails to address) the current and future risks posed by social media

Describes how IT risk coverage is defined in the IT industry but does not discuss whether it is adequate or how it addresses (or fails to address) the current and future risks posed by social media, or the description is inaccurate, unclear, or lacks detail

Does not describe how IT risk coverage is defined, whether it is adequate, or how it addresses or fails to address the current and future risks posed by social media

6

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Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value

Relationship: Internal Controls

[ACC-411-03]

Meets “Proficient” criteria and demonstrates a sophisticated understanding of internal controls put in place to protect computer data and proprietary information

Describes internal controls that are put in place specifically to protect computer data and proprietary information and how well they operate within the IT industry

Describes internal controls that are put in place specifically to protect computer data and proprietary information but does not discuss how they the operate within the IT industry, the assessment of the operation of controls is inaccurate, or the description is unclear or incomplete

Does not discuss internal controls specifically put in place to protect computer data and proprietary information or how well they operate within the IT industry

6

Relationship: Vulnerabilities [ACC-411-03]

Meets “Proficient” criteria and demonstrates sophisticated understanding of how to address IT vulnerabilities

Explains what current and future vulnerabilities exist for IT and how to address gaps

Explains what current and future vulnerabilities exist for IT but does not discuss how to address gaps, or recommendations for addressing gaps are unclear, inappropriate, or incomplete

Does not discuss current and future vulnerabilities for IT or how to address gaps

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Articulation of Response

Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format

Submission has no major errors related to citations, grammar, spelling, syntax, or organization

Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas

Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas

10

Total 100%

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Internal Audit Department

Audit Program for Cash

Audit Scope:

Audit Objectives:

Risks

· Cash transactions

· Cash may not exist

Audit Procedures

Done by

Date

W/P Ref

1. Confirm selected bank accounts and special arrangements

Select bank accounts for confirmation in order to obtain a moderate to low level of assurance that the aforementioned audit objectives are achieved. Bank confirmations should be sent to all banking relationships to identify accounts not included in the general ledger.

Confirmation requests should be sent under our control and, second requests and, where warranted, third requests should be mailed when responses to confirmation requests have not been received within a reasonable time.

Consider sending a special inquiry letter to ascertain the existence of special arrangements or restrictions, for example, compensating balance arrangements, security arrangements, written guarantees.

2. Review confirmation replies

For confirmations returned:

a) agree account information and account balance to comparative summary;

b) investigate all discrepancies reported or questions raised in review and determine whether any adjustments are necessary; and

c) assess impact of special arrangements or restrictions identified and determine whether disclosure is appropriate.

3. Test accounts where there is no confirmation

In the unusual situation where we do not receive a bank confirmation and are willing to forego the receipt of the bank confirmation, consider performing the following procedures to obtain a high level of assurance that the aforementioned audit objectives are achieved:

a) obtain subsequent month bank statement, bank reconciliation and supporting documentation. Consider obtaining information directly from the bank;

b) test the mathematical accuracy of the bank reconciliation; (accuracy)

c) trace outstanding items listed on the bank reconciliation to the subsequent month's bank statement and for those not traced, trace to the cash disbursements records for the period prior to the balance sheet date; (accuracy and existence/occurrence)

d) trace deposits in transit listed on the bank reconciliation to the subsequent month's bank statement and for those not traced, trace to the cash receipts records for the period prior to the balance sheet date; (accuracy and existence/occurrence)

e) obtain explanation for large, unusual reconciling items and trace to supporting documentation and/or entries in the cash records, as appropriate; (accuracy and existence/occurrence)

f) review the date the above items cleared the bank or were recorded in the client's books to ensure appropriate recording period. Trace to supporting documentation as necessary; and (cut-off)

g) investigate items such as, long outstanding items, dishonoured checks and significant adjustments in the subsequent month, and record adjustments as necessary. (accuracy and existence/occurrence)

4. Test bank reconciliations

Test bank reconciliation in order to obtain a moderate to low level of assurance that the aforementioned audit objectives are achieved by performing the following:

a)test the mathematical accuracy of the reconciliation; (accuracy)

b) trace book balances on the client's bank reconciliation to the comparative summary; (accuracy)

c) trace bank balances on the client's bank reconciliation to the bank statement; (accuracy)

d) test reconciling items on the bank reconciliation by performing the following:

i) obtain subsequent month bank statement and supporting documentation. Consider obtaining information directly from the bank;

ii) trace outstanding items listed on the bank reconciliation to the subsequent month's bank statement and for those not traced, trace to the cash disbursements records for the period prior to the balance sheet date; (accuracy and existence/occurrence)

iii) trace deposits in transit listed on the bank reconciliation to the subsequent month's bank statement and for those not traced, trace to the cash receipts records for the period prior to the balance sheet date; (accuracy and existence/occurrence)

iv) obtain explanation for large, unusual reconciling items and trace to supporting documentation and/or entries in the cash records, as appropriate; (accuracy and existence/occurrence)

v) review the date the above items cleared the bank or were recorded in the client's books to ensure appropriate recording period. Trace to supporting documentation as necessary; and (cut-off)

vi) investigate items such as, long outstanding items, dishonored checks and significant adjustments in the subsequent month, and record adjustments as necessary (accuracy and existence/occurrence).

e) review client's bank reconciliation for review and approval by appropriate management and timely completion of reconciliation.

(Signature of Manager or Supervisor)