Kudler Fine Foods Audit Processes Essay Example

scope. As indicated by Bagranoff (2008), implementing a risk-based audit approach enables auditors to comprehensively understand potential errors and irregularities in a company's AIS environment, along with their respective risks and susceptibilities.

Suggested Inspection

The suggested review for Kudler’s digital payroll, accounting, and purchase systems is the SAS 94 Audit given the significant volume of electronic transactions by the company. The examination will cover all application software to ensure the validity of data input, processing, output, access control and authorization, as well as error management and system log procedures (Bagranoff, 2008). Presently, Kudler implements a preliminary trial run before processing each payroll. Inspection of the output from this trial run checks all modifications to the employee's profile. Corrections are made to any errors or oversights and a second test run is produced (Kudler, 2011).

At the end of the final payroll evaluation, time records are downloaded and validated. The Purchasing Module receives comprehensive sales data from all stores and subsequently credits inventory accounts. Regular checks and assessments are conducted on the Purchasing Function. Information from this module is directly transferred to the AP module. A thorough audit takes place scrutinizing the operating system, database management system, and compliance with administrative procedures within both purchasing and payroll systems. Kudler Fine Foods' point of sale (POS) system records every retail sale in detail (Kudler, 2011). This detailed data is channeled into the general ledger, accounts payable, and bank reconciliation modules by POS system. As a component of audit processes, each cash register will undergo physical scrutiny along with environmental review to guarantee secure transactions.

Kudler utilizes the industry specific Retail Enterprise

Management System (REMS) software which consolidates all the organization's data and processes into a seamless Information System. The ERP system known as REM deploys a central database containing all data linked to the diverse system modules. For instance, the REMS enables exchange of information between the POS system and financial modules. The ideal audit method for this system would be observations and suggestions.

Kudler delegated the software tasks to Smith Systems Consulting, and they signed an annual contract for the firm to upkeep the REMS. While the resulting report from the findings and recommendations will not create a viewpoint, it will provide a summary of tasks completed and deliver an advisory review. The REMS incorporates built-in security features like passwords, monetary limits, and restricted access features. However, Kudler Fine Foods lacks formal policies or audits concerning these (Kudler Fine Foods, 2010).

In the audit, we will apply a risk-based strategy to evaluate Kudler's policies and procedures. The attribute sampling technique will be employed to scrutinize the internal controls of the POS System by monitoring sales transactions in every store. We will validate financial records from the REMS system and cross-reference them with retrieved bank statements using a variable sampling method against Kudler's bank reconciliation reports. Once all evidence has been collected and analyzed, we will make a comprehensive audit conclusion that assesses whether set goals have been met and whether established strategies worked effectively. Lastly, any considerable shortcomings or weaknesses discovered during the audit process will be pointed out for further action - this may involve requesting more documentation, carrying out another audit or arranging a telephonic conversation.

Auditing Without Using Computers

Although auditing without directly involving computers is not typically an efficient method in an electronic environment, there could be certain situations where this strategy is unavoidable. These might include scenarios such as inconsistency in payroll check sequences, anomalous codes, or repetitive time cards, which would necessitate the use of physical audit documentation. Similarly, if a particular control examination fails due to insufficient internal safeties or the existence of a system virus, there is a need for more rigorous testing procedures. In Summary.

The growth of Kudler Fine Foods has led to the integration of new system procedures, with the suggested audit being SAS94. The audit process will involve the use of attribute and variable sampling methods. A risk-based evaluation will be carried out, and any conditions discovered will be addressed.