Demonstrate an understanding of the basic principles of audit planning financial
The purpose of this project is for audit students to demonstrate an understanding the basic principles of audit planning financial statement analysis, and internal control assessment. You will be given a simulated company (Overlook Video Store) that has some audit, internal control and accounting issues.
You assume the role of auditor at Hartford and Hartford CA firm will prepare an
individual report to address these issues (details below)
Your report should be 5 pages without the cover and content page.
Individual assignment- This is an individual assignment. All reports will be
submitted to a plagiarism checking service. Any student caught plagiarizing
another student’s work (past, present or at another institution) will receive a mark of zero.
Grading
This project is worth 10% of your overall grade.
See the separate assignment grading rubric document.
Formatting requirements:
Reports must be typed, using Arial 12-point font, double-spaced, single sided
paper with 1-inch margins. Also, additional formatting of responses will be
required as outlined below. Failure to follow these requirements will result in a
10% reduction in grade.
Part I- Audit risk assessment
Prepare an overall risk assessment for the December 31, 2005 audit of Overlook
Video Store. Your risk assessment should include:
1. Assessment of inherent risk
2. Assessment of overall control risk
3. An assessment of fraud risk
4. Discussion of the type of audit approach that should be taken
5. A discussion of the various levels of materiality and users
6. Overall conclusion about audit risk, materiality and audit approach.
Part II- Analysis of the Movies by mail internal controls
Refer to Exhibit III of the case. Nick Nightingale has produced a summary of the systems surrounding new “Movies by Mail” division. Please analyze these
systems and identify and Weaknesses in Internal Control, Implications of those
weakness and provide a recommendation on how to remedy the weakness.
You should format your discussion as bullet points using the following headings:
Weakness identified:
Implication of the weakness:
Recommendation to fix the weakness:
Your analysis should consider only 4 weaknesses, implications and
recommendations. Anything more than 4 will not be reviewed.
