The Newham Company Essay

1331 Words3 Pages

The Newham Company is a publicly traded company that recently has had a change in executive management due to an inappropriate bonus structure based on company performance. As this type of bonus structure often leads to material misstatement of facts resulting in falsified financial reports, the new management at Newham has commissioned SNHU INC. to conduct an audit which assesses their risk of misstatement. The audit to follow will be broken down into three parts: Overall business risk, sample audit plan and a report of recommendations based audit results. Business Risks As per PCAOB standard 12 it is our responsibility to identify internal and external risks to the business and risks that could result in material misstatement. The Newham Company operates within the personal products industry. Their products …show more content…

• Items that are in deviation are for quantity errors and mathematical errors can and should be corrected by retraining and quality control. Credit approval should be required and a person should be assigned to the task of ensuring credit approvals exist on all applicable transactions. The person who generates the invoice should also generate the shipping order; shipping and receiving should ensure these documents exist prior to shipping. References Messier, W., & Glover, S. (2014). Chapter 3 Audit planning, types of Audit Tests and Materiality. In Auditing & assurance services: A systematic approach (Ninth ed.). New York a, New York: McGraw Hill. PCAOB AU §330 PCAOB Auditing Standard No. 5 PCAOB Auditing Standard No.

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