Waste Management Company Brand Audit Plan

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The following are the basic transactions involved in business activities that must be analyzed during an audit process:
Revenue cycle-interactions with clients, i.e. providing goods and services in return for cash.
Expenditure cycle-Involves transactions with retailers, such as exchanging cash for products.
The transfer of raw materials, labor, and manufacturing overheads into finished goods is known as the production cycle.
Payroll cycle/human resource cycle- paying for labor provided by employers
Finally, there is the borrowing loop, which entails giving or finding cash for the sake of operating an entity’s operations. It is important to note that these transactions are not limited to the above-identified as thousands of transactions may occur within the above cycles. Each of the above transaction cycles relates with another. In fact there is always a transition from one cycle to another. For example as goods get finished in the production cycle the revenue cycle commences.

The High-Risk Areas

Before conducting an audit, it is always important to consider some of the risky areas so as to pay detailed attention. This is important as it will enable an auditor to discover misstatements in the financial statements more easily. Some of the areas that an auditor has to pay attention include;

Revenue Recognition

Revenue making or profit making is one of the key reasons why organizations exist. In fact, in reporting financial performance organizations do emphasize on the progress that they have made in terms of the net profit from the previous year performance. Since investors and analysts are more concerned about profit making, management may decide and most often given an opportunity to manipulate revenue recognition principle. For this reason, auditors must and ought to understand a all the transactions in the company. Additionally, auditors are not only required to understand why there was change in revenue from one period to another but they need also to get a reason for the same.

The Going Concern Principle

Financial Accounting Standard Board FASB – 2014 calls for companies to p[repaper their financial statements with the assumptions that they will continue to exist for unknown period of time Therefore, auditors of the companies are also required to include the opinion regarding the going concern of the company in their statements.

Accounting Estimates / Fair

Another critical area that has to be considered when formulating an audit plan is the accounting estimates or fair value. Auditors are required to check the reliability of the data used, approval of estimates, qualifications of personnel involved in the estimation process and comparison of accounting estimates with the actual results. Attention must be paid to this section as it is extremely challenging as it included the controls. It is therefore, important to pay attention to accounting methods appearing to be suspicious.

The Low Risks Areas

The frequent recurring transactions in the company’s are classified as low risk areas. Cases where clients buy goods on account receivable in subsidiary ledger. Transactions that are easy to measure such as straight away transactions that a company records as they occur as opposed to transactions that are recorded as percentage of completion. Auditing of fixed assets is also an area that should be considered as a low risk area. This is especially for a company with few assets.

Available opportunities for management that may make to engage in fraudulent financial reporting

There are several opportunities that a company facing significant financial pressure is likely to use fraudulently to reduce or mitigate such pressure. One of the most common fraudulent which have been used in the past and continue being used include recognition of revenue for the coming year, delaying major expenditures that are due in one accounting period to another accounting period. Other means that are normally manipulated include transfer pricing, overvaluation of assets, hidden liabilities, fictitious sales among many more.

Circumstances under which I believe it’s appropriate for reduction of assessing control risk

The control risks are based on the assumption that a misstatement cannot be stopped or be detected in timely manner by internal control system. It’s therefore significant to minimize evaluated control risk that may over exceed accounting resources.

How to Allocate Efforts of Audit in Geographical Places

Allocation of efforts of audit in geographical places should be based upon the accounting framework and accounting standards in those countries. In making such assessment, it is important to factor the various laws operating in such geographical areas and to what extent they are effective. Therefore it is important to make geographical segment reporting so as to highlight and allocate audit risk appropriately for multinational companies. Geographical earnings increase the need for monitoring the various audit risks that are associated with such places.

Auditor’s report I expect to be issued and their meaning

Adverse opinion

Disclaimer opinion

Adverse Opinion

this is the worst financial report that can be issued by the auditor over the company .Such opinion may portray the company as not complying with Generally Accepted Accounting principle .Moreover, the financial information of the company may be miss presented

Disclaimer Opinion

In this cases where the auditor cannot provided an accurate financial report .This maybe necessitated by absence of required financial information.

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