Audit Engagement letter Essay Example | Topics and Well Written Essays - 1000 words

Audit Engagement letter - Essay Example The key objectives of the audit scope are to analyze whether your consolidated financial statements are true and fair, in all material respect, in line with the provisions of International Accounting Standards. The firm will conduct the audit process in line with the guidelines stated in the International Audit Standards. This will include all recommended tests on accounting records, as well as other procedures we consider necessary to facilitate us in expressing an opinion. If the opinion turns out to be something different other than unqualified, we will immediately notify your company and discuss the reasons in advance. In case we are unable to complete the audit within the stated period of 1.5 months, or have difficulties in expressing the opinion within the stated duration, we may decline to express any opinion or to issue an audit report as a result of this letter. Audit Engagement Checklist Section 1. Auditor’s Report With Regard To Auditor’s Report 2. Audit Proc edures 1. In Reference To Clients Acceptance 2. In Reference To Clients Understanding 3. In Reference To Audit Planning 4. In Reference To Fraud and Errors Considerations 5. In Reference To Internal Control Risks 6. In Reference To Work Done By Other Auditors 7. In Reference To Specialists If Used 8. In Reference To Audit Programs 9. In Reference To Audit Sampling 10. In Reference To Analytical Procedures 11. In Reference To Related Party Transactions 12. In Reference To Illegal Acts 13. In Reference To Audit Documentation 3. Working Papers 1. Significant Audit Areas 2. Cash 3. Receivables 4. Payables 5. Inventories 6. Assets 7. Liabilities 8. Business Consolidations and Combinations 4. Functional Areas 1. Human Resources 2. Key Ethical Requirements 3. Engagement Performance 5. Conclusion (Gupta, 2004. p. 44) The procedures will encompass examination of documentary evidence backing the transactions in the financial statements, physical examinations of assets, direct confirmation of payables and receivables. We will also randomly contact different customers, both creditors and debtors in reference to different assets and liabilities to provide evidence all transactions. The company will also request your company to provide written presentations from your attorneys as a section of the engagement. As we approach the end of the audit assignment, we will need different written presentations from your company about financial statements as well as other related matters (Ron and Rosario, 2007, p. 26). An audit entails testing, on an examination basis, disclosure of the financial statements, and evidence supporting the amounts. Therefore, the audit will entail judgment on the number of transactions to be tested and the target areas. We will also plan and perform the audit to attain reasonable assurance on whether the financial records are free from material misstatements and misrepresentations. This is because an audit avail reasonable assurance, and not absolute assur ance. Obtaining absolute assurance may be expensive and consuming. This is because it involves examining all transactions; it also exposes the task to material errors, which makes it difficult to detect frauds and other deliberate misrepresentations. Another reason why absolute assurance is unnecessary is because the scope does not aim at immaterial errors, illegal acts, and frauds that do not have any material change on the accounting records. This proves that the service cannot be relied on to expose errors

Performance pay at safelight Auto Glass Case Study

Performance pay at safelight Auto Glass - Case Study Example Because of this, Safelite created this incentive system to motivate their employees and decrease turnover. As additional motivation, they created a table to show their technicians how much more money they could make if they put in more effort. They were still guaranteed their hourly wage, but if they put more effort into their work and increased the numbers of installations, they effectively would be able to increase their wage by $3 per hour or more. In addition to the technicians, it was important that store managers were also able to partake in and understand this PPP schematic. Depending on the size of the store, the managers were also expected to install a certain number of glass pieces, as well as maintaining the motivation of their staff. Safelite understood that there may be instances where a manager spending time installing glass would be detrimental, so they categorized their stores based on size. They largest, busiest store managers were not expected to install glass, but still needed to understand the PPP. Whereas managers in the smaller, slower stores were expected to spend some time in installation. This, according to Bill Rapp, was an incentive for them to hire and maintain a small number of technicians. â€Å"We want them to think, ‘If I hire another tech, I’ll have less to install myself.’† ultimately reducing the manager’s overall pay. 1B. Does it introduce new problem? Yes, it does. A reduction in the technician’s guaranteed hourly wage may result in a huge turnover. If a technician was for some reason unable to install enough glass pieces to compensate himself to his satisfaction, he likely would move on to a competing company that would offer him the highest rate possible. There are also a number of extenuating circumstances that were not taken into account. These include: scheduling errors or miscommunications, operational problems and inclement weather. All of these could prevent the technician fro m installing enough glass to make the PPP rate. Also, in winter time, the PPP was nearly impossible to attain, and the technicians were essentially at the mercy of the CSR’s, warehouse drivers and the employees at the manufacturing facility, who were not a part of the PPP plan. The PPP plan also came across to the technicians as, â€Å"†¦We’re gonna cut your pay by 30% and you can make up the difference,† (Gassiot). This likely induced a fear in the Safelite technicians, encouraging them to move on to a company that did not gamble with their wages. 2A. What are the pros and cons of switching from wage rates to piece rate pay? The pros and cons are very similar to the answers to questions 1A and 1B. The introduction of the PPP was a great idea, in as much as it offered technicians and managers alike the opportunity to earn a higher wage. Based on their productivity and how motivated they were, they could potentially increase their salary by $3 or more per ho ur. Given that the average technician in this study only received between $10 and $12 per hour, the additional $3 per hour or more was very enticing and motivating. The PPP did not only cover glass installation, which was another incentive. It covered windshields, other glass pieces, repairs, wipers and other items used and sold in the shop, which increased the ability for an installer to increase their pay rate even more. This was good for the managers in the smaller,