I did a paper or I did a few papers here is one of them
Understanding auditing and internal controls
Understanding Auditing and internal Controls
When a person is audited does the requirements for this procedure to be a legal matter? If there are different regulations and compliances to properly recording data. Then one must assume that there can be a involvement of law, but let me explain that in every scenario the audit is not necessarily a negative legal procedure. It could be one that in fact proves the legality of your book keeping. In this paper I will cover the basic audit and some of it’s internal controls.
Design of internal Controls to reduce risk and what failure points can put controls at risk
What does it mean to determine that an objective has been reached? If an internal control has been put in place about a certain function of a company can it be assumed that it will guarantee a safe outcome for any procedures? The basis of the internal control function says that they are put in place as parameters to determine the outcomes of certain processes to minimize risk P.181 (Auditing & Assurance services 10e). Given to us as an acronym Coso Says it consist of five components to identify related risk to internal controls. I will use Microsoft and the recent news coverage about a recent Acquisition to demonstrate a possible failure point and how Coso may be effective in the scenario.
The new acquisition of Bethesda by Microsoft (Information and Communication) needed to help carry out day to day activities: With a large acquisition the use of capital and marketing that is not completely reliant on Microsoft has changed. With the new partnership of Bethesda gaming studios. A material misstatement could be possible when the determinants of how the game sales and incorporation of its licensing on other platforms or the “Game pass”. Can be misstated in not only materials but in the shareholders equity. (https://www.microsoft.com/en-us?ql=1&spl=1)
Even on things like “Tools and support” which were on the financial reports for Xbox/Microsoft’s audits. With Coso (Information and communication) it may be necessary to delegate channels of operations https://www.microsoft.com/investor/reports/ar13/financial-review/auditors-report. To show possible projects or any current and past liabilities those of which must be settled before any further audits can be performed.
Material deficiency and significant deficiency These are two separate forms of deficiency (1) Material deficiency one that cannot be detected in time to avoid a material misstatement, (2) Significant deficiency one that can be a combination of deficiencies but less severe than a material deficiency this can be avoided by maintaining a proper account of the necessary reports. Examples of Material deficiency in a company like Microsoft could be past liabilities that could be an issue and with them not being solely a gaming company. Strategic goals and revenues could have slipped a annual report.
With significant deficiencies Microsoft will have to prepare a budget for the different uses the company employs. This will be to keep judgement risk to a minimum and align goals, another risk they may want to avoid after a large acquisition will be business risk. With Microsoft the threat of both a Material deficiency and Significant deficiency are real. The combination of multiple business pursuits could cause them to be overly diversified leading to a Significant deficiency or Material deficiency. A material deficiency based on the expected revenue or projections and any possible losses.
An audit does not necessarily mean legal troubles and a loss of income. The reasons and risk inherent for doing business can vary from business to business. Although there will be signs that are present within many organizations. Owners must not let the governance and compliance be ignored by negligent actions. That may be one of the safest ways to minimize risk.
In my own start up, I felt to keep loss of income to a minimum I would react less to normality’s. I wanted to respond to possible changes so that caused for me to become consistent. By staying the same I did not spend unnecessarily, which may help me respond to differences. My business risk minimized by operating slower letting my brand grow.
- When I say normality I mean that things can appear different than the are, A large influx of buyers may not be time to change as well as a dip in clientel. To be sure of the necessary move I need to see more of what I can do with what I have after I feel it has reached a peak then possibly I should change more. Every situation is different.