Running head: Kudler Fine Foods

Kudler Fine Foods Audit Proposal Darrell Morris, Gabriella Goodfield, Sandra Barzee, and Tatiana Hewitt ACC/542 May 6, 2013 Eva Marlene King, MBA

KUDLER FINE FOODS Kudler Fine Foods Audit Introduction - Tatiana An internal audit is completed by designated staff or employees within the audited

company or by someone outside the company hired by the audited company. The internal audit is self-examination of the company. An external audit is performed from a company other than the audited company. The company preparing the audit will visit the company for a predetermined period for the review of the companys books. For Kudlers financial systems an internal audit will be performed to examine different aspects of financing (budget, accounting systems, and resources, payroll, planning, etc.). Here the auditor will ensure that the system is in compliance with the Generally Accepted Accounting Principles (GAAP). Within the financial system the audit will also examine the internal control and reporting systems, which include accounts payable, accounts receivable, billing systems, and inventory management. Accounts payable is a crucial part of Kudlers financial records and should always be monitored for fraud and that records are reconciled correctly and rechecked. Kudler should ensure for its accounts payable systems that they enforce strict procedures for accurate and timely payment of bills. This will alleviate any mix ups the best practice for Kudler is to procedures would be to perform constant daily checks, internal controls as well as external audits. In the payroll audit, Kudlers internal auditors will inspect thoroughly the documents in relation to payroll to ensure they are accurate and confirm that there are no inaccuracies relating to payroll history, or mismatch deductions of contributions. There is also a process in which the members of Kudlers finance team are identified and test them on the protocol, which is in place for payroll processing.

KUDLER FINE FOODS When distinguish the types of audits that can be used in a company there is a need to know what are the types of audits. There are five types of audits. The following are the five types of audits: 1. Operational Audit. This audit concerns in looking over the operating process. Use

internal controls for most of the audit process. This type of audit will review the cash handling, inventories, and the human resources. 2. Financial Audit. This is easy to understand this audit will examine the accounting and financial transaction. Also see if there is enough internal controls on cash and assets. 3. Compliance Audit. This audit is done to see if the company are respecting the Federal Laws, NCAA, and OSHA 4. Information Systems Audit. This will look at the control environment of automated information processing systems and how people use these systems (www.pacific.edu). Also Evaluate system input and output processing controls, backup and recovery plans, system security, and computer facilities(www.pacific.edu) 5. Investigative Audit. Major point of this audit is to see if the company has violate the laws. For accounts receivable and inventory I would two of these audits. The first one is the operational audit because it will examine human resources and handling of cash, and inventories. The second is the financial audit. Because the fact being is that during the month the company will be receiving cash for accounts receivable. This will be shown on the financial statements. The inventory levels will be changing as the store sells products. Also, the Kudler Fine Foods must re-order the products.

KUDLER FINE FOODS Different events on the computer can affect the outcome of an audit. The main risks involve system integrity, system effectiveness, system efficiency, and asset safeguarding (Bagranoff, Simkin, & Strand Norman, 2008). The computer system is only as good as the

computer programmer, the program, or the person entering the data into the computer. When the programmer makes errors installing the computer system it can cause errors in the final audited financial statements. The computer data can become corrupt through the errors causing miscalculations in the audited reports. Another problem can occur when the person entering the data in the computer enters the data incorrectly, causing incorrect reports. The person entering the data needs to know how the data affects the financial statements. The final data must match the backup documentation or the company can fail the audit. The computer system should be equipped with the correct programs to compile accurate financial statements. The computer needs to have safeguards in place to prevent lost data because of a possible computer crash. If the computer information is not backed up the data needed to complete the financial statements will be lost. Security is one of the most important functions of the computer. Conclusion - Tatiana

KUDLER FINE FOODS References Bagranoff, N. A., Simkin, M. G., & Strand Norman, C. (2008). Core Concepts of Accounting Information Systems [University of Phoenix Custom Edition eBook]. New York, NY: John Wiley & Sons, Inc. Retrieved from University of Phoenix, ACC542 - Accounting Information Systems website. http://www.pacific.edu/About-Pacific/AdministrationOffices/Business-and-FinanceDivision/About/Internal-Audit/Audit-Types.html