In this project, you will demonstrate your mastery of the following competency:
Prepare audit reports in accordance with Generally Accepted Auditing Standards.
For this project, you will focus on preparing two reports: a financial statement audit report and an internal controls audit report. An audit of financial statements and internal controls adds credibility to the reported financial position and performance of a business. The Securities and Exchange Commission requires all publicly held entities to file annual reports that are audited. An audit report can provide shareholders with reasonable assurance that the financial statements presented are true and do not contain falsified information. This creates a positive position for further investment in a company.
The auditing team of your CPA firm has performed an audit engagement for the Cloud9 company, which consists of testing financial statements, internal controls, and other factors that could have an impact on the company’s position. Using the Summary of Audit Findings document from this engagement, provided in the Supporting Materials section, you will provide two written audit reports. Each report should include all sections of the audit in accordance with the Generally Accepted Auditing Standards (GAAS) you’ve studied within this course.
After reviewing the Scenario and Supporting Materials sections of this document, you will complete an analysis of the audit engagement program using the Summary of Audit Findings document and then write your financial statements and internal controls audit reports.
For each report, you will:
Begin by analyzing the results from the Summary of Audit Findings document to identify anomalies, control deficiencies, and materiality that will impact your opinion.
You will then identify critical matters to be incorporated into the financial statements and internal controls audit reports. Use the auditing standards provided in the Supporting Materials section to guide your decisions (e.g., AS 2201).
Next, you will formulate your opinion, whether a qualified opinion or unqualified opinion, using the correct auditing standard found in the Supporting Materials section. Use these accounting standards along with the results from the Summary of Audit Findings document.
Finally, once you have all of the necessary information gathered and your analysis is complete, you will create two written audit reports, one covering financial statements and one covering internal controls. Each audit report will be based on Generally Accepted Auditing Standards (GAAS).
Specifically, you must address the following rubric criteria:
Identify anomalies found during substantive and control testing for each audit report.
Analyze materiality of control deficiencies and financial misstatements that impact materiality for each audit report.
Identify critical matters for each audit report.
Formulate an opinion of the audit based on audit results for each audit report.
Create audit reports (a financial statement report and an internal controls report) based on Generally Accepted Auditing Standards. Include the following:
Type of audit report to be communicated to client
Basis of the opinion
Critical audit matters
What to Submit
To complete this project, you must submit the following two reports:
FINANCIAL STATEMENT AUDIT REPORT
Submit a 1- to 2- page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. This assignment should include references cited according to APA style. Consult the Shapiro Library APA Style Guide for more information on citations.
INTERNAL CONTROLS AUDIT REPORT
Submit a 1- to 2-page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. This assignment should include references cited according to APA style. Consult the Shapiro Library APA Style Guide for more information on citations.
The following resources support your work on the project:
Resource: Summary of Audit Findings
Resource: AS 2201 – An Audit of Internal Control Over Financial Reporting
Resource: AS 3105 – Departures of Unqualified Opinions
Resource: AS 3101: The Auditor’s Report on an Audit of Financial Statements
Requirements: 2-4 pages; 1-2 pages for Financial statement audit report and 1-2 pages of Internal Controls Audit Report