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 company’s 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 company’s 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 company’s response should be.
1. Evaluate the findings from the audit report. Be sure to view these findings from the CFO’s 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 company’s 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
One
Two
Three
Deliverable
Draft of Procedures and Field Work (Section
I)
Draft of Risk Factors (Section II)
Module Due
Three
Grading
Graded separately; Milestone One Rubric
Five
Graded separately; Milestone Two Rubric
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 8–10 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
Procedures: Describe
Exemplary
Meets “Proficient” criteria and
description demonstrates keen
insight into how to conduct the
audit process while also
incorporating analytical
procedures
(100%)
Proficient
Describes how the audit process
would be conducted,
incorporating analytical
procedures for selected
business transactions
(90%)
Procedures: Explain
Meets “Proficient” criteria and
provides a flowchart or
supporting documentation
describing the high-risk
business transactions
(100%)
Explains the appropriate field
work needed to review high-risk
business transactions for cash
and revenue
(90%)
Procedures: Create
Factors: Statement
Factors: Sheet
Creates a test to assess
appropriate assertions for
designated high-risk business
transactions
(100%)
Meets “Proficient” criteria and
makes cogent connections to
the relationship between
revenue and accounts
receivable
(100%)
Meets “Proficient” criteria and
provides keen insight into the
risk factors present in the
balance sheet
(100%)
Analyzes the income statement
for any potential risk factors or
compliance issues with GAAP or
IFRS
(90%)
Analyzes risk factors and
compliance issues with GAAP or
IFRS on the balance sheet
(90%)
Needs Improvement
Describes how the audit process
would be conducted
incorporating analytical
procedures for selected
business transactions, but
description is inaccurate or lacks
detail
(70%)
Explains the appropriate field
work needed to review high-risk
business transactions for cash
and revenue, but explanation is
cursory or lacks detail
(70%)
Creates a test to assess
assertions for designated highrisk business transactions, but
test is inaccurate or
inappropriate
(70%)
Analyzes the income statement
for any potential risk factors or
compliance issues with GAAP or
IFRS, but analysis lacks depth or
detail
(70%)
Analyzes risk factors and
compliance issues with GAAP or
IFRS the balance sheet, but
analysis lacks depth or detail
(70%)
Not Evident
Does not describe the how the
audit process would be
conducted incorporating
analytical procedures for
selected business transactions
(0%)
Value
7
Does not explain the
appropriate field work needed
to review high-risk business
transactions for cash and
revenue
(0%)
Does not create a test to assess
appropriate assertions for
designated high-risk business
transactions
(0%)
7
Does not analyze the income
statement for any potential risk
factors or compliance issues
with GAAP or IFRS
(0%)
7
Does not analyze risk factors
and compliance issues with
GAAP or IFRS on the balance
sheet
(0%)
7
7
Factors: Control
Meets “Proficient” criteria and
analysis demonstrates a
nuanced understanding of how
the internal control is utilized in
analyzing cash and revenue
(100%)
Analyzes the cash and revenue
of the company for potential
risk factors using the internal
control
(90%)
Factors: Explain
Meets “Proficient” criteria and
explanation shows a nuanced
understanding of the audit
universe
(100%)
Explains the audit universe and
how it was identified
(90%)
Factors: Devise
Devises a sampling program for
the audit universe based on the
risk analysis
(100%)
Factors: Procedures
Meets “Proficient” criteria and
demonstrates keen insight into
the process used to test the
items sampled
(100%)
Chooses an audit testing
procedure that could be used
and justifies why it would be
preferable for this situation
(90%)
Memos: Explain
Meets “Proficient” criteria and
uses industry-specific language
to establish expertise
(100%)
Explains any sampling or other
audit work that could be done
and if the company should
pursue the additional work
(90%)
Memos: Make
Meets “Proficient” criteria and
uses industry-specific language
to establish expertise
(100%)
Makes recommendations to the
CFO on how to mitigate
potential risk factors for major
business transactions identified
in the audit report
(90%)
Analyzes the cash and revenue
of the company for potential
risk factors using the internal
control, but analysis lacks depth
or does not reference the
internal control
(70%)
Explains the audit universe and
how it was identified, but
explanation lacks depth or
detail
(70%)
Devises a sampling program for
the audit universe based on the
risk analysis, but the
documentation of risk lacks
depth or detail
(70%)
Chooses an audit testing
procedure that could be used
and justifies why it would be
preferable, but justification is
inaccurate or inappropriate
(70%)
Explains any sampling or other
audit work that could be done
and if the company should
pursue the additional work but
explanation is inaccurate or
inappropriate
(70%)
Makes recommendations to the
CFO on how to mitigate
potential risk factors for major
business transactions identified
in the audit report, but
recommendations made are
inappropriate or lack depth
(70%)
Does not analyze the cash and
revenue of the company for
potential risk factors using the
internal control
(0%)
7
Does not explain the audit
universe and how it was
identified
(0%)
7
Does not devise a sampling
program for the audit universe
based on the risk analysis
(0%)
7
Does not choose an audit
testing procedure that could be
used nor justify why it would be
preferable
(0%)
7
Does not explain any sampling
or other audit work that could
be done and if the company
should pursue the additional
work
(0%)
7
Does not make
recommendations to the CFO
on how to mitigate potential
risk factors for major business
transactions identified in the
audit report
(0%)
7
Memos: Evaluate
Meets “Proficient” criteria and
uses industry-specific language
to establish expertise
(100%)
Evaluates the findings from the
audit report from the CFO’s
point of view
(90%)
Memos: Develop
Meets “Proficient” criteria and
uses industry-specific language
to establish expertise
(100%)
Develops a strategy to mitigate
risks identified in the audit
report
(90%)
Memos: Describe
Meets “Proficient” criteria and
uses industry-specific language
to establish expertise
(100%)
Describes how the company
might implement the strategy
based on the findings from the
audit report
(90%)
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented in
a professional and easy-to-read
format
(100%)
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
(90%)
Evaluates the findings from the
audit report from the CFO’s
point of view, but evaluation
lacks depth or detail
(70%)
Develops a strategy to mitigate
risks identified in the audit
report, but strategy is
inappropriate or lacks depth
(70%)
Describes how the company
might implement the strategy
based on the findings from the
audit report, but description
lacks depth or detail
(70%)
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
(70%)
Does not evaluate the findings
from the audit report from the
CFO’s point of view
(0%)
7
Does not develop a strategy to
mitigate risks identified in the
audit report
(0%)
7
Does not describe how the
company might implement the
strategy based on the findings
from the audit report
(0%)
7
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
(0%)
2
Earned Total
100%
