ACC 700 Milestone Two Guidelines and Rubric\tThe second milestone is a rough draft of the second artifact for your professional portfolio, a sample audit. The sample audit will consist of three main parts: the\tbusiness risk analysis, the sample audit program, and the report of recommendations. This will be graded using the rubric at the end of this document and is an\topportunity for you to organize your thoughts and receive feedback from your instructor for the final submission. Note that the submission guidelines for this\tmilestone are less demanding than those for the final submission. Once you have submitted this milestone and received feedback from your instructor, it is up to\tyou to incorporate this feedback and complete the artifact by meeting the submission requirements found in the Final Project Guidelines and Rubric document.\t\tNewham Company Information\tNewham Company is a publicly traded company operating in the “personal product”\ufffd industry. Newham manufactures cosmetic and body-care products. These\tproducts are sold to large department chain stores, such as Target and Walmart, to be sold and distributed to the final consumer. Competitors include Revlon,\tInc. (REV “\ufffd NYSE) and Avon Products, Inc. (AVP – NYSE).\tNewham Company has experienced steady growth over the past several years. Recently, there has been a change in executive management, including the CEO\tand CFO. The change was sparked by questionable bonus payments that were paid to the executive management team based on the company’s performance. In\taddition, a recent lawsuit has been filed based on claims that a new product was not properly advertised, leading many customers to experience allergic\treactions.\t\tSales and Accounts Receivable\tA sample of weekly sales invoices shall be analyzed from the sales report by product category. All sales are on account. Sales are classified into four product\tcategories: cosmetics, skin care, fragrance, and personal care. Charges to customer accounts should be dated with the date of shipment.\tSales invoices are prepared in batches on a daily basis using numbered sales invoices. Sales invoice numbers are automatically generated by the company’s\tcomputer system. The accounts receivable clerk does not have appropriate computer rights to override the computer-generated invoice number. Upon\tpreparing sales invoices, the accounts receivable clerk verifies that the first invoice number of the batch is consistent with the last invoice number of the\tprevious batch. Inconsistencies or skipped sales invoice numbers are investigated and resolved before new sales invoices are prepared. The items shipped are\tcompared to the items billed for proper quantity, price, and other sales order terms.\tThe accounting department supervisor compares and reconciles a copy of the daily sales invoice batch report to the daily accounts posting report indicating the\tindividual accounts. The daily account posting report is prepared and sent by the accounts receivable department. Discrepancies are investigated and resolved\tto help assure that the customer subsidiary accounts are posted for the same total amount posted to the control account.\t\tAt the end of each month, the total of the trial balance of customer account balances (prepared by the accounts receivable department) are reconciled to the\tgeneral ledger control account by the accounting department supervisor.\tSales invoice batches are dated with the date of shipment, and totals of each batches are accumulated each month and recorded in the accounts receivable\tcontrol and sales revenue accounts. The accounting department supervisor approves all monthly summary entries before posting to the general ledger.\tThe controller approves all cash refunds and allowance credit memos for sales returns, after initiation by customer service.\tCash Management\tThe monthly bank statements are mailed to the controller’s office. Duplicate deposit slips are retained and used when bank deposits are made, the cash receipts\tjournal listing, and the cash disbursements listing to reconcile the general bank accounts. The payroll bank account is also reconciled, utilizing the payroll register\tretained by the controller’s office.\tThe assistant controller oversees all cash management and activity, including the performance of the bank account reconciliation for each bank account held by\tthe company. The assistant controller compares the cash receipts journal and daily deposit records with the bank deposits and duplicate deposit slips during the\tbank account reconciliation.\tInternal auditors will randomly review the bank account reconciliations.\tCash Receipts and Accounts Receivable Processing\tAll cash receipts from customers related to sales are credited to accounts receivable individual and control accounts. Cash receipts are received by mail and\topened by the office secretary. The office secretary prepares the cash receipt listing and daily deposit. A copy of the cash receipt listing and duplicate deposit\tslip is sent to the controller’s office. Another copy of the cash receipt listing and the remittance advice are sent to the accounts receivable clerk for posting.\tThe accounts receivable department posts credits to individual customer accounts, dating the entries with the date of the remittance advice and cash receipt\tlisting received.\tStatements of accounts receivable balances are mailed to customers each month by the accounts receivable accounting department. Customers’ reports of\tdisputes or differences shall be handled by customer service.\t\tCash Disbursements\tAll disbursements are made by check, signed by the controller.\t\tArtifact Two: Sample Audit Program\tYour second portfolio artifact will be the professional audit program based on PCAOB audit standards that you create for Newham, an influential client at\tS.N.H.U, LLC. Make sure to incorporate the feedback you receive from your instructor while developing this audit program. The following sections should be\tincluded:\t\t\tBusiness Risk Analysis: Identifying risk in an organization and the environment in which it operates is the first step in approaching a potential audit and\tdesigning an effective audit program. To analyze business risk, you must:\t\tGain an understanding of Newham\tInvestigate the industry in which Newham operates\tAnalyze and assess the risk, including fraud, involved in the company and industry\tIdentify the relevant PCAOB audit standards and address their relevance to the Newham audit risk assessment\t\tSample Audit Program: An audit program involves compiling a list (program) of procedures for the auditors to perform in order to obtain evidence and\treasonable assurance that internal controls are operating properly and thus producing accurate financial statements. To compile a sample audit\tprogram, you have been provided with tests of control in revenue and inventory.\tYou must identify the relevant PCAOB audit standards and address their relevance to the Newham audit program. Include other elements as applicable to\tNewham.\t\t\tReport of Recommendations: Based on an auditor’s experiences and knowledge of accounting, finance, and common errors or pitfalls, it is common for\tan auditor to provide recommendations. The sample audit program addressed here is merely a small sample, not a comprehensive program. Thus,\trecommendations for further risk analysis, sample methods, and other concerns should be offered. In your report of recommendations to the head of\tthe new audit team, include the following sections:\t\tExplanation of findings in the risk analysis\tSarbanes”\ufffdOxley concerns or requirements\tRecommendations on appropriate sampling methods\tRecommendations for preparation and success in the external audit<\/p>\n","protected":false},"excerpt":{"rendered":"
ACC 700 Milestone Two Guidelines and Rubric The second milestone is a rough draft of the second artifact for your professional portfolio, a sample audit. The sample audit will consist of three main parts: the business risk analysis, the sample Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-200689","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/200689","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=200689"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/200689\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=200689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=200689"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=200689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}