What are the business objectives?

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For the final project, you will work through components of a case study in which you will assume the role of a lead auditor at Willis & Adams. Your firm has been approached by EarthWear Clothiers to perform an audit. In your role as lead auditor, you will perform management duties. You will evaluate internal and external factors to determine client engagement, develop an audit plan, determine recommendations for improving internal controls, and communicate the audit opinion. For this milestone, you will develop the audit plan.

Prompt: Your organization has decided to move forward with the audit of EarthWear Clothiers. As lead auditor, you will select one of EarthWear Clothiers’ business objectives and create an audit plan of their financial statements.

The business objectives are:

 Expand further into the global market by launching internet sites into South American countries

 Increase customer base by introducing a new extreme sports product line to attract younger consumers

 Reduce pricing to be more competitive in the marketplace by seeking out additional vendor relationships to lower costs of goods sold

 Implement an employee stock purchase plan to increase productivity and employee morale

 Reduce delivery and distribution time of products and services by adding additional warehouse locations

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ACC 675 Milestone Two Guidelines and Rubric As an auditor, the ability to transcribe formalized or narrative processes into functional workflows allows you to identify potential gaps in accounting systems. These gaps can result in material audit findings necessitating changes in the company control structure. For Milestone Two, prepare an analysis of Trinity Industries’ first year of Sarbanes–Oxley (SOX) compliance. The vice president (VP) and chief audit executive described the company as a likely candidate for a material weakness in the first year of SOX compliance. What were the elements critical to the company’s decisive success in its first year of compliance? Define a material weakness and explain the material weaknesses that are specific to Trinity. Describe the factors that made Trinity a success by illustrating the flow processes of the organization both in a narrative and process flowchart. This flowchart will be used to identify gaps and other threats to potential audit weaknesses. Prompt: Formulate your processes into a comprehensive flowchart that will be used to identify gaps in processes and other threats to potential audit weaknesses. Specifically, the following critical elements must be addressed: II. First Year of SOX Compliance a) The VP and chief audit executive described the company as a likely candidate for a material weakness in the first year of SOX compliance. What were the elements critical to the company’s decisive success in its first year of compliance? b) What internal controls are important for preparing accurate and reliable financial reports? Support your response using both examples provided in the case study, as well as research into accounting standards (i.e., Public Company Accounting Oversight Board [PCAOB]). c) Define, using support from accounting standards or other empirical evidence, what a material weakness is in terms of SOX compliance. d) Assess, through reflection on the case study as well as the comparable industries identified in the overview, what material weaknesses are specific to Trinity. e) Articulate standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance. Ensure that you demonstrate the requirements of SOX from inception in 2002. f) Describe the factors that made Trinity successful by illustrating the flow processes of the organization both in a narrative and process flowchart. Rubric Guidelines for Submission: Your analysis must be submitted as a 2–3-page Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format. Critical Elements First Year of SOX Compliance: Success Proficient (100%) Accurately determines elements critical to the company’s success in its first year of compliance First Year of SOX Compliance: Internal Controls Discusses which internal controls are important for preparing financial reports and supports response with examples from the case study and research into PCAOB First Year of SOX Compliance: Material Weakness Defines what a material weakness is in terms of SOX compliance using support from accounting standards or other empirical evidence Assesses which material weaknesses are specific to the company through a reflection on the case study and comparable industries identified in the overview First Year of SOX Compliance: Specific First Year of SOX Compliance: PCAOB Articulates standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance and ensures demonstration of the requirements of SOX from inception in 2002 Needs Improvement (75%) Determines elements critical to the company’s success in its first year of compliance but determination contains inaccuracies Discusses which internal controls are important for preparing financial reports and supports response with examples from the case study and research into PCAOB but support is weak or illogical or does not use further research Defines what a material weakness is in terms of SOX compliance using support from accounting standards or other empirical evidence but support is weak Assesses which material weaknesses are specific to the company through a reflection on the case study and comparable industries identified in the overview but assessment is cursory or contains inaccuracies Articulates standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance but does not ensure demonstration of the requirements of SOX from inception in 2002 Not Evident (0%) Does not determine elements critical to the company’s success in its first year of compliance Value 16 Does not discuss which internal controls are important for preparing financial reports 16 Does not define what a material weakness is in terms of SOX compliance using support 16 Does not assess which material weaknesses are specific to the company 16 Does not articulate standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance 16 First Year of SOX Compliance: Factors Describes the factors that made Trinity successful by illustrating the flow processes of the organization both in a narrative and process flowchart Articulation of Response Submission has no major errors related to citations, grammar, spelling, syntax, or organization Describes the factors that made Trinity successful by illustrating the flow processes of the organization both in a narrative and process flowchart but one or both lack detail or contain inaccuracies Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Does not describe the factors that made Trinity successful 16 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas 4 Earned Total 100%
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Explanation & Answer

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Running head: TRINITY INDUSTRIES

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Trinity Industries
Name
Instructor
Course
Date

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TRINITY INDUSTRIES
Trinity Industries

The Trinity Industries was described as the most competitive firm during its first year of
Sarbanes-Oxley (SOX). Despite the presence of several organizations that were successful and
consistently improving, they were able to run into problems like other companies when compliance
was put in place. The failure of these industries was due to the lack of the required processes and
documentation of control plans (Schultze, 2011). They did not have the required evidence that
there were any performance controls. The critical element to the decisive success of the company
was during the compliance year that included standardization of the reporting system, analysis of
the gap to SOX compliance, documenting the control system and recommendations for closing the
gap. Additionally, there was monitoring of control systems, training of employees in every level
and assertions of management that were supposed to be fixed.
Preparation of reliable and accurate financial report in a fashion that is timely comes when
there is an internal control that has been put in place, and they are working effectively. The major
internal controls are critical to achieving this mission because they have the documentation
showing that there is an existence of performance control. It does not just rely on any list of
transactions that have been all completed. Additionally, another vital form of control are systems
that help in ensuring that there are recordation and authorization of all procedures that will be
followed in every financial transaction (PCAOB 2016). The processes of transactions can address
fraud risks as stated in the Auditing Standard Number Five.
A material weakness is defined as a deficiency found in internal controls that finally lead
to the reasonable possibility of misstatement of a material that is not able to detect or prevent an
error early. Some of the material weakness specific for Trinity include documentation of
performed controls (Rodengen, & Lieber, 2002). This is due to the different environments that

TRINITY INDUSTRIES
...


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