Describe audit procedures you would perform to test controls
Audit Report Assignment
Instructions (Activities you will perform to help you write your assignment report):
• Public Company is Under Armour, Inc.
• Access the financial statements for a recent year through the SEC filings on the Company’s website (Provided 2016 SEC 10K)
• Note risk factors described in 10K
• Select specific areas/functions/accounts (examples: Sales, Receivables, Payroll, Procurement, Inventory, Investments, Treasury operations etc.) that are impacted by the risk factors. Assumethat you would audit these areas in your internal audit. You can choose a maximum of two areas.
• Identify a total of four controls,in the specific areas/functions/accounts you selected, that should have been existing and working effectively. Your audit reveals that the controls were either not designed well (design deficiency) or were not working effectively (operational effectiveness). This will result in four hypothetical issues/findings (one each for the four controls identified) you will include in your audit report as Audit Observations. The controls should clearly be different. For example you cannot identify ‘segregation of duties’ in different areas as four controls.
• Determine the recommendations you would like to make on each of the four issues.
• Imagine yourself as the management and decide the action plan to correct the issue identified.
• Determine to whom the Audit Report would be issued.
• See below for the assignment to be submitted
Complete the assignment using your own words.
Assignment to be completed:
You will submit your assignment in two partsas detailed below but in a single word document. Each part would be two pages or more in length (single spaced in Times New Roman 12 font), with appropriate sections/headings etc.
The contents of the two parts of the assignment should be:
Part 1 – Analysis
• Introduction
• Company Background: Includebriefly information on industry, main products, major financial statement items etc. Provide the link to the financial statements.
• Audit Areas/Functions for Internal Audit: Indicate the areas/functions selected (maximum 2) for internal audit and your rationale for selecting them [you can usethe risk factors as stated in 10K (include page #) or you can give your own reasons which should be well substantiated]
• Internal Controls: List the control objectives for the selected areas/functions and describe a total of four internal controls that should be existing and working effectively in the selected areas. The controls can be distributed in the two areas you had selected.
• Audit procedures: Describe the audit procedures you would perform to test the controls. Briefly describes the steps including sample selection. The resultant issues (four in all) will be described as Audit Observations in the Audit Report along with Audit Recommendations and Management Responses/Action Plans.
• Addressing the Audit Report: Describe to whom you will address the Audit Report
Part 2 – Audit Report
Audit Reports come in many formats. You can choose any format. However, the report should include at the minimum, the following:
• Should be appropriately addressed
• Executive Summary (include an overall Audit Opinion and the rationale)
• Detailed Audit Report
o Background
o Objectives of audit
o Scope of Audit
o Audit approach (How the audit was performed)
o Audit Observations,Audit Recommendation(s) and Management Responses/Action Plans, for each observation. The Observations should have risk ratings.
