Newham Company has hired S.N.U, LLC to audit its company and to present a report that is according to PCAOB audit standards. Our report will include a business risk analysis, sample audit program, and recommendation on our finding. Newham Company is a publicly traded company that manufactures personal care products, which include cosmetic and body-care products. The company has been growing at a steady growth with their products in some of the larger department stores like Target and Walmart. Newham biggest competitors are Revlon Inc. and Avon Products, Inc. The personal care product industry has been on a continually growing worldwide. It contains over 750 companies that create over $40 billion in combined revenues. The top 50 companies control …show more content…
• Understanding of internal control, planning process, and evidence gathered through inspection, inquires, and observation. • Report should state if the financial statements are prepared according to GAAP, informative disclosure, and the report should contain an opinion for the founding. Our accounting firm audit risk in this case, “is the risk that the financial statements are materially incorrect, even though the audit opinion states that the financial reports are free of any material misstatements (Investopedia).”There are two area of audit risk, the risk of material misstatement and detection risk, which may carry legal liability. To avoid this our firm will have to understand the company business process and their internal control. Also, our team needs to have experienced individual to properly and accurately perform the audit. This will avoid the firm from any issues with the PCAOB. Sample Audit Program To test management assertion that sales have increased in 2015 we will create an audit program for the revenues cycle. • Acceptance and approval of credit …show more content…
The company’s management is responsible for the accuracy of the trail balance and the revenues documents. Our responsibility is to express an opinion on our finding during the audit. Our audit has been conducted according to PCAOB and GAAP, which requires that we conduct our audit to obtain a reasonable assurance that the financial statements are free of material misstatements. The Sarbanes-Oxley Act of 2002(SOX) was passed by congress to protect investors from fraudulent accounting practices by corporations. The act is responsible for reforms in the area of corporate responsibility, increase criminal punishment, and accounting regulations. Section 404 of the Sarbanes-Oxley Act of 2002 states, “issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. The registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting (Sox law).” We have the responsibility of providing the investors with an audit report that gives an accurate picture of the financial position of Newham