Part 2—Problem 9-37 (Due Week 4, 20 points)

Part 2 presents information that will help your team assess the business and audit risks associated with your audit. This evidence, together with your analysis from Part 1,will be the basis of your written risk assessment.You may wish to use a risk matrix similar to Figure 9-6 aspart of your presentation.The risk assessment should be presented as a memo to file.The memo should identify the users of thefinancial statement and their reliance on the financial statements, the likelihood of the client having financial difficulties, and the integrity of management. Next, your memo will establish the acceptable audit risk as low, medium, or high, with a justification for your selection. The memo should then address the inherent risk and the associated account(s) with each of the 11 situations discussed in the problem.

Part 3—Problem 10-43 (Due Week 4, 20 points)

This part of the project requires your team to review the internal control flowchart presented in the case to identify the existing internal controls over the acquisition and payment cycle. You will then identify weaknesses, if any, in those controls and assess the control risks that the weaknesses present. Your team will then complete the control risk matrices workpaper included in the zip file downloaded from the above link. A model of this worksheet is presented on page 309 for a sales cycle audit.

ScholarMatic: Explanation & Answer

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