Strayer Univeristy Audit Procedures Test of Internal Controls Analysis

User Generated

ohexsn

Business Finance

Strayer Univeristy

Description

INHERENT RISK, TESTS OF CONTROLS, AND SUBSTANTIVE PROCEDURES

Inherent Risk, Tests of Controls, and Substantive Procedures

Overview

In this assignment, you will prepare a 2–3 page professional document that addresses the requirements specified in the case. Fully address each requirement and include at least two current references to scholarly and/or authoritative sources.

Instructions

Specifically you will be required to:

  1. Calculate the required ratios for all given years.
  2. Identify and explain high inherent risk assertions.
  3. Analyze and draw conclusions about the nature and extent of tests of controls.
  4. Analyze and draw conclusions about the nature, timing, and extent of substantive procedures.
  5. Use at least two current, quality academic or authoritative sources in this assignment. Note: Wikipedia and similar websites do not qualify as quality scholarly and/or authoritative sources. Use the Strayer University Library to conduct your research.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course.

The specific course learning outcome associated with this assignment is:

  • Develop conclusions about risks, control tests, and substantive procedures for a given client using analysis and calculations.

Attachment preview

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Explanation & Answer

Attached.

Running head: AUDIT PROCEDURES

1

Audit Procedures

Student Name
Institution Affiliation
Course
Professor
Date

AUDIT PROCEDURES

2
Audit Procedures

Test of internal controls and substantive procedures
For this assignment, the company whose financial ratios would be analyzed is Nike.
An analysis of the nature and scope of tests of controls will also be conducted alongside the
analysis of substantive tests that need to be undertaken. Furthermore, the paper will identify
and explain high inherent risk assertions. Identification of inherent risks is majorly a
subjective process and will heavily depend on the business nature of the company being
audited. It will also depend on the environment in which the company exists.
Required Ratios
The ratios that are required are those that give insights into the appropriateness and
the validity of management assertions of existence, cut off, rights, and obligation, among
others (Basu, 2010). These ratios are categorized into growth ratios, profitability ratios,
turnover ratios, liquidity ratios, among others.
Growth
There are various indicators of growth in a company, which include the percentage
change in sales or revenue and the percentage change in assets. The number of employees
hired and growth in assets and cash flows (Businesswire, 2019)
Growth in Revenue Nike
Growth in revenues is given by:
(Current revenue- Previous revenues)/previous revenues *100%
= ($ 39.117b...


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