Gloria Deal's Auditing Unit 5 Assignment

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A Scientific Method Auditing Unit 5 Assignment Gloria Deal Kaplan University The Scientific Method
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A Scientific Method A. It seems the Fiber Optics Inc. has a great forecast with them having an increase of 20 percent in their sale and a 27 percent increase in their profit with only having a client base of 5 customers. One would ask them how this is at all possible with a slow economy and 3 other competitors making similar products. I. I feel that the auditor needs to check on stealing of inventory that can manipulate the financial report. Then check the company’s contracts to make sure they are legitimate and report any and all finds to the proper department as well as report the proper reports in regards to the proper quarter or period. B. In my opinion the auditor should do some extensive research into how long this company has been in business, the company’s previous audits, and how many times this company has had a new CEO/CFO, or new management/owner.
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Unformatted text preview: Once done with this the auditor should then research inquires on the sale of this company and its competitors. By doing this the auditor can catch any and all red flags like if the other companies are not doing so well and Fiber Optics Inc. is. The auditor can also learn if there is an audit committee, when and how often they meet with any external/internal auditors, management, CEO/CFO? C. Hypothesis: I. With only 5 customers we can gather that there are some very fictitious contracts that are generating more profit then actual profit. Control Failures: I. All of the company’s contracts should be verified that they are valid, real people, and that sales are valid with invoices for the current period. A Scientific Method Audit Procedures: I. The auditor should send out a confirmation sheet to any and all customer‘s for them to fill out and return with a copy of the receipt to verify all purchases dates and purchases....
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