Auditing
SEC and Creating Audit Report
Select a publicly traded company using the U.S. Securities and Exchange Commission (SEC) EDGAR System at https://sec.gov/edgar/searchedgar/companysearch.html and submit to the instructor for approval. Please note that each student must research a different company. Once the instructor has approved the company selection, obtain the Annual Report (Form 10K) and Proxy Statement (Form DEF 14A) of the company for the immediate past fiscal year. Review these documents in addition to Earnings Releases and other financial information available on the company?s Investor Relations website to evaluate the following items.
Independent Auditor?s Report
Based on the selected public traded company, what type of auditor?s report was issued on the financial statements.
What kind of evidence the auditors found that was indicate the company did not follow Generally Accepted Accounting Principles (GAAP).
Audit Committee
Identify members of the Audit Committee of the Board of Directors, its functions, and number of meetings held.
Determine if the composition of this committee satisfies Public Company Accounting Oversight Board (PCAOB) requirements in terms of independence and accounting knowledge.
Review the audit committee report and discuss Committee actions. Determine how these actions ensure the integrity of the audited financial statements.
Independent Registered Public Accountants
Identify the company?s independent registered public accounting firm.
Determine how long this firm has served as the external auditors.
Determine other services, if any, provided to or on behalf of the company.
Determine fees paid to this firm by type of service provided.
Discuss changes in or disagreements with the accountants on accounting and financial disclosures, if any.
Reports of the Independent Registered Public Accountants
Review the report of the independent registered public accounting firm on internal controls. Determine if the report and its contents meet the criteria established in Internal Control ? Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the PCAOB.
Review the report of the independent registered public accounting firm on the audited financial statements. Determine what type of opinion issued and whether the work performed meets the criteria of COSO and the PCAOB, in addition to GAAP and GAAS.
Prepare a 10-12 page research paper (excluding title page, abstract, references page, and appendices containing financial analysis) in APA format that presents the findings of your analysis of the company?s SEC filings. Your paper should also discuss the following:
The type of auditor?s report that was issued.
What kind of evidence the auditors found which indicated the company did not follow Generally Accepted Accounting Principles (GAAP).
Roles, responsibilities, and objectives of internal and external auditors.
Types and assessment of audit and Internal control risks.
Ethical standards in auditing and the implications of unethical behavior.
Internal control system, its role in a business and its significance in the auditing process.
Use of computer assisted auditing techniques.
GAAS, GAAP, PCAOB, and COSO requirements for audits of publicly traded companies.
In addition to the SEC Forms, a minimum of five (5) peer-reviewed academic or professional references must be used in the paper.
This is the first year that you have audited Hurst & Johnson Corporation. You discovered that the company is carrying its property, plant, and equipment at appraisal values and determines depreciation on the basis of these values. This is considered a very large scope-limitation, and you have not been able to form an opinion on the financial statements taken as a whole.
Discuss the ethical issues involved with this situation.
Explain how you should handle this situation.
Explain what type of report you should issue and why.