ACC 640 Final Project Guidelines and Rubric

Overview
The final project for this course is the creation of an audit report with memos.

Auditing is a valuable skill in accounting and business, as the odds are very high that you or your organization will be subject to a compliance, federal, IRS,
internal, government, or revenue audit at one point in your career. Accountants are required to make professional judgments on both the financial accounting
issues and internal accounting forecasts within their organization. The auditor must provide fair, unbiased, materially correct information for investors,
employers, employees, and independent stakeholders. This course will help you navigate the relevant processes to provide that unbiased, accurate information.

The purpose of the assessment is to familiarize you with the process of auditing and what to do with the auditing information once you have it. You will explore
how to plan audit work, analyze financial statements, perform tests on that information, and properly and professionally communicate the results of an audit.

The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final
submissions. These milestones will be submitted in Modules Three, Five, and Seven. The final submission will be due in Module Nine.

In this assignment, you will demonstrate your mastery of the following course outcomes:

Determine risk factors for organizations based on analysis of audit risk, audit evidence, and financial statement assertions
Develop strategies to mitigate potential risk factors using organizational internal controls
Create an audit program to achieve audit objectives related to revenue
Analyze audit reports for appropriately communicating the result of the audit process
Devise a sampling program for the audit universe to formulate field activities

Prompt
For this assessment, you should assume you are on the internal audit staff of a publicly traded company. Choose one of the following companies: Walmart,
Target, Sears, Kroger, or Amazon. You will be required to obtain the last two years worth of financial statements and a recent audit report. The internal audit
group at the company is tasked with preparing for an upcoming revenue audit and analyzing the business risk internally to mitigate audit findings. You will
conduct an internal audit of the company using the information gathered and create a report. Then, you will prepare appropriate memos analyzing the audit
report you have prepared, while offering feedback and recommendations.
Specifically, the following critical elements must be addressed:

I. Procedures and Field Work: For this part of the assessment, you will begin your audit report using the information you have gathered to address the
following elements pertaining to procedures and field work.
A. Describe how you would conduct the audit process, incorporating the analytical procedures you would use to investigate selected business
transactions.
1. What steps will you take to review the companys business transactions?
2. What would your plan be to utilize these procedures?
B. Explain the appropriate field work needed to review high-risk business transactions for cash and revenue.
1. What would you need to do in the field to investigate these?
2. Could you convey this information through charts or other supporting documentation?
C. Create a test to assess appropriate assertions for designated high-risk business transactions.

II. Risk Factors: For this part of the assessment, you will continue your audit report using the information you have gathered to address the following
elements pertaining to risk factors in all the major business transactions.
A. Analyze the income statement for any potential risk factors and compliance issues with Generally Accepted Accounting Principles (GAAP) or
International Financial Recording Standards (IFRS).
B. Analyze the risk factors and compliance issues with GAAP or IFRS on the balance sheet.
C. Using the internal control, analyze the cash and revenue for potential risk factors.
1. What risks need to be documented?
2. How does this information compare to the company or industry averages, or the companys past performance?
D. Explain the audit universe and how you identified it.
E. Based on your analysis of risk, devise a sampling program for the audit universe.
F. Choose the most preferable audit testing procedures that could be used in the field, based on the audit universe items sampled in this situation.

III. Memos: For this part of the assessment, you will use your audit report to prepare memos to upper management.
A. Prepare a memo to be reviewed by the chief financial officer (CFO) that summarizes the audit process.
1. Explain any sampling or other audit work that could be done, and if you would recommend the company pursue this additional work.
Justify your response.
2. Make recommendations to the CFO on how to mitigate potential risk factors for major business transactions identified in the audit report.
B. Assume you are now the CFO. Prepare a memo to the Board of Directors as to what potential issues the external audit team might find and what
the companys response should be.
1. Evaluate the findings from the audit report. Be sure to view these findings from the CFOs point of view.
2. Develop a strategy to mitigate risks identified in the audit report.
3. Describe how the company might implement the strategy based on the findings from the audit report.
 Milestones
Milestone One: Draft of Procedures and Field Work (Section I)
In Module Three, you will submit a draft of the procedures and field work required for conducting your audit process. Describe how you would conduct the audit
process for the company you have chosen, including the analytical procedures you would use to investigate selected business transactions. Explain the
appropriate field work needed to review high-risk business transactions for cash and revenue and create a test to assess appropriate assertions for designated
high-risk business transactions. This milestone is graded with the Milestone One Rubric.

Milestone Two: Draft of Risk Factors (Section II)

In Module Five, you will submit a draft of risk factors as identified for all of the major business transactions conducted by your chosen company. Analyze the
income statement, balance sheet, and cash and revenue for any potential risk factors and compliance issues with Generally Accepted Accounting Principles
(GAAP) or International Financial Recording Standards (IFRS). Based on your analysis of risk, devise a statistical and judgmental sampling program for the audit
universe. Recommend the most preferable audit testing procedure based on the audit universe items sampled. This milestone is graded with the Milestone Two
Rubric.

Milestone Three: Draft of Memos (Section III)

In Module Seven, you will submit a draft of your memos to upper management. First, you will prepare a memo to be reviewed by the chief financial officer (CFO)
of your chosen company that summarizes the audit process conducted. Then, you will assume the role of CFO of the company and prepare a memo to the Board
of Directors as to what potential issues the external audit team might find and what the companys response should be. This milestone is graded with the
Milestone Three Rubric.

Final Submission: Audit Report with Memos

In Module Nine, you will submit your audit report with memos offering feedback and recommendations. It should be a complete, polished artifact containing all
of the critical elements of the final project. It should reflect the incorporation of feedback gained throughout the course. This submission is graded with the Final
Project Rubric.

Deliverables
Milestone Deliverable Module Due Grading
One Draft of Procedures and Field Work (Section Three Graded separately; Milestone One Rubric
I)
Two Draft of Risk Factors (Section II) Five Graded separately; Milestone Two Rubric
Three Draft of Memos (Section III) Seven Graded separately; Milestone Three Rubric
Final Submission: Audit Report with Memos Nine Graded separately; Final project Rubric
 Final Project Rubric
Guidelines for Submission: Your audit report with memos must be 810 pages in length including report and supporting documents (plus a cover page and
references). Use double spacing, 12-point Times New Roman font, and one-inch margins.

Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information,
review these instructions.

Critical Elements Exemplary Proficient Needs Improvement Not Evident Value

Procedures: Describe Meets Proficient criteria and Describes how the audit process Describes how the audit process Does not describe the how the 7
description demonstrates keen would be conducted, would be conducted audit process would be
insight into how to conduct the incorporating analytical incorporating analytical conducted incorporating
audit process while also procedures for selected procedures for selected analytical procedures for
incorporating analytical business transactions business transactions, but selected business transactions
procedures (90%) description is inaccurate or lacks (0%)
(100%) detail
(70%)
Procedures: Explain Meets Proficient criteria and Explains the appropriate field Explains the appropriate field Does not explain the 7
provides a flowchart or work needed to review high-risk work needed to review high-risk appropriate field work needed
supporting documentation business transactions for cash business transactions for cash to review high-risk business
describing the high-risk and revenue and revenue, but explanation is transactions for cash and
business transactions (90%) cursory or lacks detail revenue
(100%) (70%) (0%)
Procedures: Create Creates a test to assess Creates a test to assess Does not create a test to assess 7
appropriate assertions for assertions for designated high- appropriate assertions for
designated high-risk business risk business transactions, but designated high-risk business
transactions test is inaccurate or transactions
(100%) inappropriate (0%)
(70%)
Factors: Statement Meets Proficient criteria and Analyzes the income statement Analyzes the income statement Does not analyze the income 7
makes cogent connections to for any potential risk factors or for any potential risk factors or statement for any potential risk
the relationship between compliance issues with GAAP or compliance issues with GAAP or factors or compliance issues
revenue and accounts IFRS IFRS, but analysis lacks depth or with GAAP or IFRS
receivable (90%) detail (0%)
(100%) (70%)
Factors: Sheet Meets Proficient criteria and Analyzes risk factors and Analyzes risk factors and Does not analyze risk factors 7
provides keen insight into the compliance issues with GAAP or compliance issues with GAAP or and compliance issues with
risk factors present in the IFRS on the balance sheet IFRS the balance sheet, but GAAP or IFRS on the balance
balance sheet (90%) analysis lacks depth or detail sheet
(100%) (70%) (0%)
 Factors: Control Meets Proficient criteria and Analyzes the cash and revenue Analyzes the cash and revenue Does not analyze the cash and 7
analysis demonstrates a of the company for potential of the company for potential revenue of the company for
nuanced understanding of how risk factors using the internal risk factors using the internal potential risk factors using the
the internal control is utilized in control control, but analysis lacks depth internal control
analyzing cash and revenue (90%) or does not reference the (0%)
(100%) internal control
(70%)
Factors: Explain Meets Proficient criteria and Explains the audit universe and Explains the audit universe and Does not explain the audit 7
explanation shows a nuanced how it was identified how it was identified, but universe and how it was
understanding of the audit (90%) explanation lacks depth or identified
universe detail (0%)
(100%) (70%)
Factors: Devise Devises a sampling program for Devises a sampling program for Does not devise a sampling 7
the audit universe based on the the audit universe based on the program for the audit universe
risk analysis risk analysis, but the based on the risk analysis
(100%) documentation of risk lacks (0%)
depth or detail
(70%)
Factors: Procedures Meets Proficient criteria and Chooses an audit testing Chooses an audit testing Does not choose an audit 7
demonstrates keen insight into procedure that could be used procedure that could be used testing procedure that could be
the process used to test the and justifies why it would be and justifies why it would be used nor justify why it would be
items sampled preferable for this situation preferable, but justification is preferable
(100%) (90%) inaccurate or inappropriate (0%)
(70%)
Memos: Explain Meets Proficient criteria and Explains any sampling or other Explains any sampling or other Does not explain any sampling 7
uses industry-specific language audit work that could be done audit work that could be done or other audit work that could
to establish expertise and if the company should and if the company should be done and if the company
(100%) pursue the additional work pursue the additional work, but should pursue the additional
(90%) explanation is inaccurate or work
inappropriate (0%)
(70%)
Memos: Make Meets Proficient criteria and Makes recommendations to the Makes recommendations to the Does not make 7
uses industry-specific language CFO on how to mitigate CFO on how to mitigate recommendations to the CFO
to establish expertise potential risk factors for major potential risk factors for major on how to mitigate potential
(100%) business transactions identified business transactions identified risk factors for major business
in the audit report in the audit report, but transactions identified in the
(90%) recommendations made are audit report
inappropriate or lack depth (0%)
(70%)
Memos: Evaluate Meets Proficient criteria and Evaluates the findings from the Evaluates the findings from the Does not evaluate the findings 7
uses industry-specific language audit report from the CFOs audit report from the CFOs from the audit report from the
to establish expertise point of view point of view, but evaluation CFOs point of view
(100%) (90%) lacks depth or detail (0%)
(70%)
Memos: Develop Meets Proficient criteria and Develops a strategy to mitigate Develops a strategy to mitigate Does not develop a strategy to 7
uses industry-specific language risks identified in the audit risks identified in the audit mitigate risks identified in the
to establish expertise report report, but strategy is audit report
(100%) (90%) inappropriate or lacks depth (0%)
(70%)
Memos: Describe Meets Proficient criteria and Describes how the company Describes how the company Does not describe how the 7
uses industry-specific language might implement the strategy might implement the strategy company might implement the
to establish expertise based on the findings from the based on the findings from the strategy based on the findings
(100%) audit report audit report, but description from the audit report
(90%) lacks depth or detail (0%)
(70%)
Articulation of Submission is free of errors Submission has no major errors Submission has major errors Submission has critical errors 2
Response related to citations, grammar, related to citations, grammar, related to citations, grammar, related to citations, grammar,
spelling, syntax, and spelling, syntax, or organization spelling, syntax, or organization spelling, syntax, or organization
organization and is presented in (90%) that negatively impact that prevent understanding of
a professional and easy-to-read readability and articulation of ideas
format main ideas (0%)
(100%) (70%)
Earned Total 100%