Procedures of Auditing.docx - 1 Milestone 1 Investigating Analytical Procedures of Auditing Accounting 640 Southern New Hampshire University The

Procedures of Auditing.docx - 1 Milestone 1 Investigating...

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1 Milestone 1: Investigating Analytical Procedures of Auditing Accounting 640 Southern New Hampshire University The Auditing Board of standards issued a preface to the Codification of Auditing Standards that contains the “Principles Underlying an Audit in accordance with GAAS”. These principles provide an outline to help auditors obtain reasonable assurance about whether financial statements are free from material misstatement due to fraud or error so that the auditor can conclude the audit with an opinion of the financial statement, report on financial statements, and communicate as required by GAAS (Arens, 2017). Before conducting an audit for any business entity, the auditor must know why the job is on the internal audit plan, what are the end goals of the audit, what enterprise risk or risk will the
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2 Milestone 1: Investigating Analytical Procedures of Auditing audit provide, what were the results of the previous audit and are there significant changes since that audit, and the auditor must also decide which type of evidence is vital and will conclude the audit with an unbiased, reliable opinion. There are eight types of evidence that an auditor can use to conduct the audit program and the 8 types of evidence are as follows: Physical examination, confirmation, inspection, analytical procedures, inquires of the client, recalculation, reperformance, and observation. Every audit procedure is conducted by using one or more of the following evidence types described above. For this audit procedure the evidence that will be used to conduct the audit for the C corporation, Amazon.com (Arens, 2017). A. Procedures: Describe Analytical procedures are used during three phrases of the four phase during an audit program: planning (I), testing (II), and the completion phase (IV). During the planning phase , Analytical procedures are required in this phase and will be used to conduct the audit for Amazon.com to better understand the company’s business and to determine the nature, extent, and timing of the audit procedure. During the testing phase of an audit, analytical procedures are used as a substantive test in support of account balances. Tax documents, financial accounts, and business insurance accounts are cross referenced and compared with the same type of account and policy as part of conducting test during the testing phase. The third phase of the audit procedure is the c ompletion phase , in which a higher ranking accountant will analyze the auditor’s findings of the company’s financial statements and audit files to determine if the auditor’s investigation is concluded or if it holds any discretionary findings (Arens, 2017). Analytical procedures, will be used to evaluate the company’s recorded financial accounts by comparing the company’s prior year ratio’s to the company’s current year ratios to determine any high risk business transaction for cash and revenue (Arens, 2017).
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