Summary of the Audit Plan
The internal audit plan specific for the California Crunch Company will seek to determine the issues and problems currently affecting the company’s financial status and also determine the addressable strengths and weaknesses (AICPA, 2017). Accomplishing a successful audit for the company will require a comprehensive audit plan with specific details clearly outlined.
The first step of the plan is to define the specific audits to be performed. At this stage, the types of internal audit engagements to be performed are determined (AICPA, 2017). Also, the inclusion of the audits besides the internal controls will be considered for operational, performance, and compliance audits.
The second phase is to perform a risk assessment and prioritizing risks within the company’s financial status as provided in the three documents. In this case, the specific risks within the organization will be identified and addressed (AICPA, 2017). After this, the internal audits will be prioritized to show the additional audits that might need analysis.
The third step is to designate the resources and define the audit timeline for the plan. At this stage, the specific person to work on each task in the audit is mentioned along with their skill levels (AICPA, 2017). Also, it will involve determining whether certain audits will need to be conducted at specific times during the financial period.
The fourth step is to conduct a comprehensive preparation for the audit where the necessary guidance will be reviewed for every audit such as regulations, policies, procedures, and industrial standards (AICPA, 2017). Then, the audit plan specifics will be clearly outlined where the specific objectives and scope for the audit are outlined. In addition, the key reports, procedures, and policies for the process are identified and explained (AICPA, 2017). Finally, the audit plan will be reviewed and several meetings held with the company owner and representatives for this purpose.
Summary of the Specific Steps for the Audit Process
The initial step in the audit process is to define the objectives of the audit, a task that will also involve defining the likely scope of the procedure. Here, the auditor will start to develop the program to define the testing procedures for the audit which will also involve a review of the results from the last audit (Oestriecher & Beasley, 2020). The second step is an audit announcement that will involve formally sending an audit engagement memo to the management at California Crunch Company. In the memo’s distribution list will be senior administration officials with the responsibility for managing the company’s finance. The memo aims to provide a comprehensive introduction of the objectives of the audit process, detail the review process, and set out the expectations of the procedure (Brivot, Roussy & Mayer, 2018).
The third step is an audit entrance meeting between the auditor and the company representatives to discuss the audit scope and the steps to be followed (Oestriecher & Beasley, 2020). During the meeting, the company will be asked to provide an overview of major operations and programs internal to the company, the relevant names, policies, procedures, and other specifics required to assist the auditor in the fieldwork.
Fieldwork is the fourth and the most critical step in the audit process as it involves gathering the actual data and performing audit testing to gain an understanding of the company’s internal controls. At this point, the company’s financial documents and other records will be analyzed for effective internal controls (Oestriecher & Beasley, 2020). Detailed testing of transactions will be an important task during the fieldwork step in the audit process. In addition, the company’s compliance with the existing industry policies and standards as well as regulations will be an important area of interest in the process.
After completing the fieldwork step, the next procedure is to review and communicate the results. In this case, the identified control weaknesses, procedural or policy violations, and any other issues of concern will be discussed with the company representatives. In addition, any observations made during the fieldwork stage will be discussed with the representatives to ensure that they understand any weakness or risk in their financial reports (Oestriecher & Beasley, 2020). Moreover, the company representatives must fully understand the recommendations that the auditor has made in the audit report.
An audit exit meeting is the next step and will involve the conclusion of the entire process. Ideally, the auditor will hold a meeting with the company management to discuss the observations and recommendations made in the report (Oestriecher & Beasley, 2020). During the meeting, the recommendations will be reviewed and discussed to ensure that the top management makes a reasonable and achievable response.
The final step in the process is audit report making developed based on the preceding six steps. In this case, a comprehensive audit report will be developed and written down with completeness and accuracy for a formal action plan (Oestriecher & Beasley, 2020). The purpose of this report is to inform the top company management about the identified concerns or control issues and how to address such problems.
References
AICPA. (2017). Audit and accounting guide: Investment companies, 2017. John Wiley & Sons.
Brivot, M., Roussy, M., & Mayer, M. (2018). Conventions of audit quality: The perspective of public and private company audit partners. Auditing: A Journal of Practice & Theory, 37(2), 51-71. Web.
Oestriecher, K., & Beasley, M. (2020). Annual accounting and auditing workshop. John Wiley & Sons.