Running head: AUDIT ENGAGEMENT LETTER AUDIT ENGAGEMENT LETTER Colorado Technical University – Online Candace Dease ACCT638-1802B-01 Unit 1 IP Professor: C. Hodge May 24, 2018 1 AUDIT ENGAGEMENT LETTER 2 The Chief Executive Officer Restorative Pharmaceuticals Corporation May 24, 2018 Dear Sir AUDIT ENGAGEMENT LETTER The primary purpose of this engagement letter is to set out the fundamental basis upon which we are to act as the company’s auditors and the respective areas of responsibility of the restorative pharmaceuticals corporation and ourselves. 1.0 THE RESPONSIBILITIES OF RESTORATIVE PHARMACEUTICALS CORPORATION AND AUDITORS 1.1 The restorative pharmaceuticals corporation, you are responsible as per the auditing standards to maintaining proper accounting records and any other relevant financial document. The corporation is also responsible for the preparation of some necessary reports which do present the financial position and transactions of the corporation while also complying with the international accounting standards regulations or any circular issued by the government. 1.2 Kindly note that the corporation is responsible for ensuring that the restorative pharmaceuticals corporation has completely and fully complied with all the regulations and laws which are critical to the essential functional operations of the corporation. 1.3 You are entirely responsible for ensuring that the supervisors and the managers to give us topnotch levels of co-operation and also making themselves available to us to facilitate a smooth AUDIT ENGAGEMENT LETTER 3 auditing process and delivery of final results. Additionally, the corporation is to ensure that all its books of accounts and all other related documents including the minutes of all statutory meetings are availed. 1.4 We as the auditing team have a responsibility which is statutory under the auditing standards and acts to report to the state auditing committee as to whether in our opinions the accounts reported do present fairly the financial position and transactions of the Restorative pharmaceuticals corporation. In our final audit report we as the auditors are required by the auditing law and professional conduct to always have a keen look at the following underlying issues and report on any of them which has not been applied satisfactorily; a) Whether the proper records and books of account and all other financial records have satisfactorily been maintained: b) Whether the restorative pharmaceuticals expenditures and income account, as well as the statement of financial position, correlate positively with the books of accounts; c) Whether we as the auditors have obtained all the necessary information and sufficient explanations which we deem necessary for the entire purpose of a fruitful audit 1.5 We as the auditors have a professional obligation to report if the accounts by the corporation do not satisfactorily comply with the applicable accounting standards in New York; unless in our sole opinion, the non-compliance is uniquely justified in the circumstances at hand. In our determination as to whether the non-compliance is justified or not, we consider; a) Whether the non-compliance is required for the accounts to present fairly entirely; and b) Whether the necessary and sufficient prior disclosure has been made concerning the non-compliance. 2.0 SCOPE OF THE ENTIRE AUDIT AUDIT ENGAGEMENT LETTER 4 2.1 The entire audit will be conducted in full realization and compliance of all the United States auditing requirements and standards which are time and again issued by the Institute of the certified public accountants and also those issued by the state of New York. Which include tests of transactions and their existence, valuation and ownership of the corporation’s assets as well as its liabilities as we as the auditing team consider necessary. As the auditing team shall further obtain a complete understanding of all the internal control systems and accounting systems to assess and evaluate their adequacy as the fundamental basis for the essential preparation of the accounts as well as establishing whether the Restorative pharmaceuticals corporation has properly maintained the books of accounts. We as the auditing team will expect to sufficiently obtain any crucial and appropriate evidence as we deem sufficient to enable us reasonably conclude basing on them. 2.2 The entire nature and full extent of the auditing procedures will entirely vary according to our own assessment of the Restorative pharmaceuticals corporation accounting systems and, where we as the auditors may wish to place some reliance on as well as the internal control systems of the firm, and we may also cover any other aspect of the corporation's operations that we may deem appropriate to the audit. It is important to note that our audit isn't designed to identify all the crucial weaknesses in the firm's systems, but if any comes up in the course of our audit and which we think ought to be brought to the necessary attention, we shall surely report to you. Such a report arising will only be reported to you and not any other third party. 2.3 As part of our routine and standard auditing procedures, we may time and again request the managers and other management staff particularly those in the finance section to provide us with AUDIT ENGAGEMENT LETTER 5 some written confirmation of some specific oral information that we have received from them during the entire course of the audit on some of the matters that have substantial material effect on the books of account and financial statements. 2.4 To help with the accounts examination and evaluations, we shall request for some financial documents and statements which include the annual budget, financial and operating review and the Restorative pharmaceuticals corporations financial report. Additionally, we are entitled to attend all the firm's general meetings and also to receive any official notice of all other such meetings. 2.5 The responsibility of safeguarding all the essential assets of Restorative Pharmaceuticals Corporation and for detection and prevention of fraud, non-compliance with the laws or any regulation solely rest with the corporation. However. We as the auditors shall ultimately endeavor to categorically plan our entire audit so that we do have some very reasonable expectations towards the detection of material misstatements in the books of accounts. However, our examination ought not to be solely relied upon towards the disclosure of all frauds or material misstatements, errors or non-compliances that may exist. 2.6 Once we have handed over our audit report then we have no other direct responsibility going forward concerning the accounting records for that particular period. We, however, expect you to inform us of any substantial event that may occur between the submission of the accounts to the government authority and the date of our report. 2.7 officers of the national auditing committee have the right to communicate with us the auditors on any matter concerning the corporation's accounts and any other supporting statements. 3.0 FEES AUDIT ENGAGEMENT LETTER 6 3.1 Our audit fees are fixed at$50,000 and are arrived at on the basis of the total expected time that the audit will take as well as considering the levels and skills and unique responsibility that our the team has. 4.0 AGREEMENT OF TERMS 4.1 Once agreed as a legal binding between both parties, It is important to note that this engagement letter will continue to remain relevant to all other preceding audits unless both parties decide otherwise due to change in certain conditions. We shall appreciate if you do confirm in writing of your management agreement to the terms contained in this letter by signing and the return of a copy of this letter, or likewise communicate to us if they aren’t quite in accordance with your entire understanding of the particular terms and conditions we have established. Yours faithfully, Scott Payne Scott Payne, Certified Public Accountant The final auditor’s report should time and again make references to the standing laws regarding audits and those particular laws issued by the international auditing and reporting bodies. Some recommendations should also follow the report by the auditors. The restorative pharmaceutical should time and again refer to the accounting reporting procedures and standards both nationally and internationally. We agree to all the terms of this engagement letter. AUDIT ENGAGEMENT LETTER The Managing Director, Maxine Price Restorative Pharmaceutical Corporation Date: 7 AUDIT ENGAGEMENT LETTER 8 References Beattie, V., Goodacre, A., & Fearnley, S. (2003). And then there were four: A study of UK audit market concentration‐causes, consequences and the scope for market adjustment. Journal of Financial Regulation and Compliance, 11(3), 250-265. Parker, C. (2007). Meta-regulation: legal accountability for corporate social responsibility. Solid Waste Authority. (2016) financial statement and reports of independent certified public accountant. Delaware County Running head: INTERNAL CONTROL PROCEDURES Internal Control Procedures CTU-Online Candace Dease ACCT68-1802B-02 Unit 2 IP Professor: C. Hodge May 30, 2018 1 INTERNAL CONTROL PROCEDURES 1 Company’s information Being rated by the New-York Stock-Exchange, the Restorative Pharmaceutical-Corporation (RPC) is responsible for safeguarding the interests of its stakeholders’. RPC deals with a number of health products such as protein-infused beverages, vitamins and dietary supplements. Furthermore, RPC advertises its products by use of television commercial among other online platforms for the purposes of attracting more customers. As per the given scenario, RPC appears to be doing great with a total annual sale of sales of approximately $100million. Therefore, the company can be categorized to be a viable business meaning that its products are free from FDA approval, though, there is need for a general safety of the products. Therefore, the RPC’s products have to be subjected for examination for the purposes of ensuring customers are given the best products. Issues arising For the past three successive reviews contacted at RPC, it is clear that its newest launch to the market (acai as well as mango blend smoothie) is being has been investigated by the FDA after constant claims from the consumers that what was promised by the firm is different from what they received. The RPC’s adverts stated that the new product was to improve memory by 50% and lower cholesterol levels by approximately 50% for individuals over ages of 50 years. As a result, RPC is being sued for approximately over $2-million and no revelation was given by the end of annual financial statements. Another issue identified is that the Mexican-Infrastructure of the logistics which focuses on the supplying of the products has been highly affected (Harrer, 2008). This has resulted to a delay after a major loss of $5-million for the last one-year course. All these losses are displayed on the RPC’s investors’ statement and it is believed to shut down the company is appropriate measures are not taken. INTERNAL CONTROL PROCEDURES 1 Internal controls Based on the above analysis, there is need to call for major changes for purposes of streamlining the performance. Running such firms using delicate products is a risky situation which needs to be addressed with a lot of care. To address the issues identified, there is need to introduce a number of internal control procedures. Control activities RPC needs to follow the right process as outlined by the law and be honesty to its customers when advertising products and services. Misrepresenting the firm’s products and services may result to a complete closure as witnessed in the scenario. Firstly, the firm needs to have company PR personnel to lead through the advertising process. The PR will be responsible for leading the firm towards the right direction when representing its products to the public. Secondly, a committee of approving adverts needs to be implemented to avoid deceiving the customers. Therefore, the approving and assessing committee will help in ensuring that the public receive the best from the company. Furthermore, this will call for sharing of responsibilities and duties which will prevent firm workers from making such mistakes (Harrer, 2008). Monitoring As presented in the given scenario, the firm’s production plant is located in Mexico meaning that there are less or no logistics issues. The plant is located in Mexico due to the availability of cheap labour force and raw material meaning the cost of production relatively low. Therefore, the company is guaranteed to have a higher profit margin. RPC should ensure a close monitoring of its supply chain. A monitoring transport system needs to be implemented for the purposes of ensuring smooth transportation of the products through the borders. For example, the company may set a department for handling and screening the border-control paperwork as well as the vehicle tracking cameras for the purposes of monitoring the vehicle movements (Pickett, 2002). Lastly, there is need to monitor and analyse the supply chain system to help the company identify where the origin of the risen issues. INTERNAL CONTROL PROCEDURES 1 Furthermore, it is important to keep records for smoothening the work of auditors. Thus, RCP won’t lose more money when such issues will be found and fixed. Conclusion The lawsuit pending is a great issue to the company. Therefore, lawyers should perform to their best to prevent future loses. Moreover, the firm’s accountants should conduct a proper and accurate financial statements showing all the transactions to avoid discrepancies which may cost the firm during the long run (Pickett, 2002). INTERNAL CONTROL PROCEDURES 1 References Harrer, J. (2008). Internal control strategies. Hoboken, N.J.: Wiley. Pickett, K. (2002). Internal Control. New York, NY: John Wiley & Sons. 1 Running head: ORGANIZATIONAL STRUCTURE, STRATEGY AND FINANCIAL CONTROL Organizational Structure, Strategy and Financial Control Colorado Technical University - Online Candace Dease ACCT638-1802B-01 Unit 3 IP Professor: C. Hodge June 8, 2018 2 ORGANIZATIONAL STRUCTURE, STRATEGY AND FINANCIAL CONTROL Definition of Organizational Structure and Control Organizational structure is the hierarchy over which lines of communication, authority, duties and rights are arranged. It determines how power, roles and responsibilities are controlled, coordinated, allocated and the way flow of communication is affected in the different management levels. The structure of an organization depends on its strategies and objectives. Organization control refers to the process of evaluating, assigning and regulation of resources on a continuous basis in accomplishing the goals of an organization. Managers must understand the standards of performance and establish methods of sharing information with employees that enables successful control process in the organization. It is seen as the process managers employ in ensuring that real performance is aligned with the plans of an organization through regulation of activities (Puranam & Maciejovsky, 2017). Difference between Strategic Control and Financial Control Strategic control refers to the process that organizations use to regulate the formulation and execute their strategic plans. It is seen as an alternative management type of control that is specialized to handle specific management issues that are ambiguous. Strategic control is focused on achieving goals that are future-oriented through tracking the strategies as they are implemented. A suitable control detects and any problems or fluctuations in a strategy and puts in place adjustments that correct undesired outcomes that may arise. Strategic control is highly focused on future undertakings which are not tangible (Fabrizi, 2017). On the other hand, financial control refers to processes, procedures and policies that organizations implement to manage their finances. It is specifically focused on achieving the financial objectives by meeting the obligations of the organization. In their implementation, financial controls are based on responsibilities, accountability and automation. It is an analysis of the actual financial results in comparison with 3 ORGANIZATIONAL STRUCTURE, STRATEGY AND FINANCIAL CONTROL the organization's short-term, medium-term and long-term goals. This shows that financial control is based on practical and tangible resources from both in the past and in the future ("Accounting and Financial Control", 2018). 4 ORGANIZATIONAL STRUCTURE, STRATEGY AND FINANCIAL CONTROL Works Cited Puranam, P., & Maciejovsky, B. (2017). Organizational Structure and Organizational Learning. Oxford Handbooks Online. doi:10.1093/oxfordhb/9780190263362.013.35. Fabrizi, R. (2017). Strategic Control. China Story Yearbook doi:10.22459/csy.06.2017.09. Accounting and Financial Control, 2(1). (2018). doi:10.21511/afc.02(1).2018. 2016: Control. Running head: NIKE COMPANY AUDIT REPORT Nike Company Audit Report Institution Name 1 NIKE COMPANY AUDIT REPORT 2 Nike Company Overview Nike Company was incorporated in September 1968. The company designs, develops and sells a range of athletic footwear, equipment, attire, and accessories in many markets in the world. Its market segments are North America, Japan, Greater China, Europe and other emerging markets. The company manufactures its products through independent contractors and sells them through their retail stores and other distributors in the world ("Nike Inc. Innovation, Sustainability, Community Impact and More", 2018). Nike Company’s 2016 Audit Report The audit report as compiled by the Independent Registered Public Accounting Firm opined that the consolidated financial-statements that were listed by the company presented a fair in reporting the financial position of the company. In all material respects, the notes provided for the financial statements were in conjunction with the presented figures. It was also reported that the company had adhered to the generally accepted accounting principles recognized in the United States. The accounting firm also evaluated the company’s internal controls and opined that the company had executed its responsibility in establishing effective internal controls over that resulted in the preparation of consolidated financial-statements and reports ("Securities and Exchange Commission Document", 2016). Issues Raised The issues that were raised by the auditing were that internal controls of the company should be designed in such a way that they can provide reasonable assurance on the reliability of the reporting and preparation of financial statements that are meant for the external scrutiny. The internal controls are supposed to formulate policies and procedures that would allow accuracy and completeness of statements as required by the generally accepted accounting principles. Since the NIKE COMPANY AUDIT REPORT 3 company had adhered to these principles, the accounting firm did not highlight any errors in the report ("Securities And Exchange Commission Document", 2016). Audits Assurance on the Financial Statements The auditing firm’s opinions were that consolidated financial-statements and reports were prepared in conformity with the generally accepted accounting principles and that Nike’s management had well-established policies and procedures in its internal controls used in processing, preparation and reporting financial information. Upon conducting all the tests and evaluation of the overall management, the opinion provides the audit’s assurance on the financial statements. It is clear that the company did not have any errors that were noted in the audit and there was no misstatement in there reports and statements ("Securities And Exchange Commission Document", 2016). NIKE COMPANY AUDIT REPORT 4 References Securities and Exchange Commission Document. (2016). Retrieved May 26, 2018, from https://www.sec.gov/Archives/edgar/data/320187/000032018716000336/nke5312016x10k.htm#s8D103414D414A564F4AB81E266AFE4E0. Nike Inc. innovation, sustainability, community impact and more. (2018). Retrieved May 26, 2018, from https://about.nike.com/. [NAME] 1 CTU-Online Candace Dease ACCT68-1802B-02 Unit 3 DB Professor: C. Hodge June 4, 2018 Sufficient deficiency and Material Weakness as Cited in Nanaimo City Sufficient deficiency happens when there is a deficiency or a combination of different deficiencies in the internal control over financial reporting and which is important enough to bring into attention those that are responsible for the oversight and supervision of a company’s reporting. On the other hand, a material weakness is a deficiency that happens when there is a possible misreporting in the value of the financial statements of the company. A deficiency usually happens in either design or operation. A deficiency that happens through design may exist where there is control necessary to achieve control objective misses or there is an existing control which has not been properly designed even when the control operates as it has been designed, it will not be able to achieve the objective. According to a survey that was conducted in 2014 by International Forum of Independent Audit Regulators (IFIAR), 24% deficiencies were due to internal control testing, 20% of the deficiencies were due to fair value measurement, and 14% of the deficiencies were due to revenue recognition. Most public companies in different countries have audit problems where different deficiencies come up during and after the audit. [NAME] 2 The best example of an audit report that identified sufficient deficiency and material weakness is the audit of Nanaimo city which was done by KPMG. The auditor discovered that the financial statements of the city represented in all respects that the financial position of the city was consolidated. The report found different significant deficiencies in financial reporting through internal control. The audit addressed different problems workplaces and serious misconduct in the field of financial reporting. According to KPMG, employees “raised the alarm over the appropriate usage of funds in the city and the ability to collect the funds such as taxes and other revenues.” Also, KPMG also found different deficiencies in the reporting of expenses as presented by the chief of an administrative officer with the financial officer. This is whereby the financial statements of the expenses were misreported and overpriced. Regarding hiring process, the report discovered that the city had good established hiring procedure but found that the steps in the hiring process are bypassed at the senior management levels. This was evidenced by lack of following the advice from the human resource department which has been mandated to handle all matters concerning employees. Some of the employees had been recruited without attaining the required standards. This report was presented to the city by KPMG on May to be presented at a meeting on May 9, 2018. The staff recommended that the financial and audit committee should approve the city’s financial statements for the financial year 2017. [NAME] Works Cited Craig, R KPMG Report on City of Nanaimo 2018 “City of Nanaimo auditor finds deficiencies in whistleblower policies.” Westerly News. 2018. Web. 3 May 2018 3 
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