Planning and Audit

Evaluate the Effect on audit procedures at EarthWear Clothier

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Evaluate the corporate structure and annual report of EarthWear Clothier. For the final project, you will assume the role of lead auditor at an
external auditing firm, Willis & Adams. The firm is reevaluating its
client list and audit procedures. You will be responsible for supporting
the continued engagement of a current client, EarthWear Clothiers, and
planning the audit of this organization’s financial statements. You will
evaluate and recommend improvements to internal controls, and
communicate the audit opinions to the senior management of the
organization.

Specifically, the following critical elements must be addressed:

I. Client Engagement: The external auditing team has been approached by
a client to do their yearly audit. You are responsible for evaluating
the factors associated with the organization and the external auditing
team to determine why it would be appropriate to move forward with the
client request. A. Evaluate the corporate structure and annual report of
the organization, and summarize your findings. [ACC-645-01]

Evaluate the Effect on audit procedures at EarthWear Clothier

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B. Evaluate the following information related to the external auditing firm, and
summarize your findings: [ACC-645-01] 1. Independence 2. Knowledge of
client industry 3. Staffing capabilities C. Assume your firm has decided
to move forward. Referring to your evaluation of internal and external
factors, explain why it would be appropriate for the external auditing
team to accept the client audit request, using examples to support your
response. [ACC-645-01]

II. Planning the Audit: Select one of the organization’s business
objectives and create an audit plan of the organization’s financial
statements. Use the information from your preliminary review and
auditing standards to support your plan. A. Using your selected business
objective, create an audit plan of the organization’s financial
statements that addresses the following, and support each with the
appropriate auditing standards: 1. Business risks [ACC-645-02] 2.
Management assertions [ACC-645-02] 3. Audit risk [ACC-645-02] 4.
Internal controls [ACC-645-02] 5. Effect on audit procedures
[ACC-645-02] B. Determine materiality by conducting a preliminary risk
assessment, and explain which factors were used in making this
determination. [ACC- 645-02]

Evaluate the Effect on audit procedures at EarthWear Clothier

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III. Internal Control: Evaluate the following components within an
organization for gaps in internal controls, and explain how each can be
improved: A. Control environment [ACC-645-03] B. Risk assessment
[ACC-645-03] C. Information system [ACC-645-03] D. Control activities
[ACC-645-03] E. Monitoring activities [ACC-645-03]

IV. Communication: Create a letter to management that identifies any
gaps in internal control and provides resolution. In addition, in a
separate section of your submission, include audit opinions of both the
internal controls and the financial statements of the organization.

A. Prepare a letter to management that clearly communicates internal
control deficiencies or material weaknesses, and provide recommendations
to remediate concerns. [ACC-645-04] B. Prepare an audit opinion of
internal controls, and explain the impact it has on the audit of
financial statements. [ACC-645-04] C. Prepare an audit opinion of
financial statements, and explain why the opinion is appropriate based
on findings in the audit. [ACC-645-04]