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ACC 410 Plan for Keystone Computers




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Cash Flow
Audit Plan
ACC 410 Plan for Keystone Computers
I will attempt to set up an audit plan for Keystone Computers &
Networks, Inc. In order to set up this audit plan, I will use an outline
format that will cover systematically throughout the entire audit. Every
audit is unique in which all auditors have their own ways of making their
plans. Planning of an audit is a continuous process and that the strategy
and planned audit approach may change as new information comes to
an auditors attention during the course of the audit. The steps that the
auditor will approach on the audit plan will be as follows. The auditor will
start by planning a quality audit for Keystone Computers & Networks,
Inc. The plan will then be to perform a quality audit for Keystone
Computers & Networks, Inc. The next step will be to look for any kind of
fraud, both financial reporting and misappropriation of assets. The last
step will be to prepare the audit report. I will attempt to start from the first
of the report and outline all the steps throughout the entire process.
I. Introduction
A. Setting up an audit plan in the opening paragraph
B. Systematic of the format, the auditor will use to prepare an audit plan
of Keystone Computers & Networks, Inc.
C. Supporting sentences in making the entire audit plan work for the
In order to start an audit the auditor needs to plan everything out before
approaching the client’s financial statements and stating the audit, there
are steps to perform prior to actually starting the actual audit.
II. Planning a quality audit in preparation of Keystone Computers &
Networks, Inc
A. First, the auditor needs to get to know the client, as well as
understand the nature and scope of the audit.

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1. Once they feel comfortable towards the client, the auditor will make
the decision rather to select them or not.
B. Review the internal controls for the company to ensure the client’s
records are reliable.
1. The quality of the internal controls will substantiate the financial
statements amounts.
2. “The auditors’ consideration of control risk involves analyzing the
design and implementation of internal control to decide whether the
internal control system appears adequate to prevent or detect and
correct material misstatements (Whittington & Pany, 2010).”
C. Significant Risks noted while obtaining information about Keystone
Computers & Networks, Inc.
1. “KCN has engaged in a strategy to sell to customers with higher credit
2. The officers of the company receive significant bonuses based on
quarterly results (Whittington & Pany, 2010).”
D. Need to gather sufficient appropriate audit evidence.
1. Setting a basis for expressing an opinion on the financial statements
E. Determine the documents needed from the client to perform the audit.
1. Financial statements are one of the most important aspects of the
2. Determine the responsibilities of the client. Who is in charge of getting
the required information to review?
3. Determine the timing it will take to finish the audit so the client
understands how much time it will take to complete the audit.
F. Determine the fee charged to the client and present the proposal to
them in writing.
Once the auditor has planned the audit and have gotten to know the
client as well as received documents from the client to be able to start
the procedures, they are now ready to perform the audit. This step

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sometimes called the fieldwork and performed by the auditors. In this
case, they will be performing the fieldwork and reporting their findings.
“This is the time of the year that many internal auditors are preparing or
finalizing their annual audit plans. The author discusses four business
events apparent in troubled economies that internal auditors should take
into consideration when developing their audit plans. These are 1. The
impact of labor-force reductions on the effectiveness of internal control,
2. The impact of lower earnings on the determination of audit scopes, 3.
The impact of vendor and customer viability on operations, and 4. The
increased likelihood of fraud (Dickens, 2010, p. 36).”
III. Performing a quality audit for Keystone Computers & Network Inc
A. Review of the financial statements and compare from previous year.
1. Review the Balance sheet dated December 31, 20X5
2. Review the Statement of Income and Retained Earnings dated
December 31, 20X5
B. Measurement and review of financial performance
1. Inventory and receivables turnover, how long is it taking to turnover
inventory and receivables.
2. Are accounts receivables starting to age and if so are there measures
in place to eliminate these receivables?
3. How well are sales and revenues?
4. Did net income increase or decrease by the percentage the company
5. What is the total inventory balance at the end of the year?
C. Objectives in place to increase revenues by 10 percent and increase
net income by 12 percent each year for the next three years.
D. Business risks associated with the company’s strategies.
1. Did the increased advertising help produce an increase in both
revenues and net income?

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