Strategic Systems Audit
As the organizations' business strategies are becoming more complex over time, the auditing practices have been completely evolving correspondingly over the last hundred years (Bell ou al. 97, 10), coming from a transaction-based audit just before 1900, to risk-based audit approach throughout the twentieth 100 years to today's " Proper Systems AuditвЂќ (SSA) because promoted by simply Solomon and Peecher over the last several years to reinvent the financial affirmation audit. Tactical Systems Taxation focuses on the auditing procedures that test out the statements at entity-level based on the holistic understanding of the client business environment and business aspect (Bell ain al. 97, 10, 22). However , there were many experts of this strategy where several criticize that SSA offered rise to a number of review failures.
In the lumination of this, the purpose of this composition is to take a look at and evaluate the rationale and practicality with the suggested solutions given by the Strategic Devices Audit way of audit planning and the conduct of the examine. To achieve this sort of purpose, scientific evidence will be used where the guidelines set forth by the theoretical materials on the Strategic Systems Review will be applied to a real-life audit circumstance. As such, the SEC registrant, Hollywood Mass media Corp. can be chosen since the organization to be audited by the SSA strategy.
There are 3 sections through this paper, 1) Background and literature review, in which the background and important concept of SSA approach will be discussed and critiqued; 2) Business Risk Analysis of Hollywood Multimedia Corp., in which an Entity-Level Business Model recommended by SSA of this business will be examined and the likelihood of this organization will be identified as a iniciador to preparing the economical audit; 3) Conclusion and Recommendation, in which suggestions will probably be made on how the techniques set out by Solomon and Peecher may be incorporated in a typical monetary statement taxation.
Background and Books Review
Traditionally, the audit strategy adopted by simply auditors is transaction-based wherever auditors evaluated the examine risk and tested accounting transaction without having to pay attention to the understanding of the entity as well as its environment (Bell et 's. 1997, 15). However , because the organizations' business approaches are becoming more complicated in twentieth century, this kind of transaction-based procedure is no longer enough to ensure audit effectiveness (Bell et al. 1997, 15). The audit failure in the case of Lincoln Personal savings and Bank loan illustrates the importance of a risk-based audit, in case there is management scams, even auditors apparently used standard review procedures, however they failed to discover materials misstatements inside the financial statement due to receiving unreliable facts from consumer (Bell et al. 97, 15 -- 16).
As such, to enhance audit quality in response for the evolving review environment, Solomon and Peecher believe auditors should earth their opinion about the client by simply understanding their operating environment and the discussion between it is internal business process and external environment. This is known as risk-based Strategic System Taxation (SSA) (Bell et 's. 1997, 16), which they believe could better detect intentional or unintended fraud than traditional procedure.
Literature Report on Strategic System Audit вЂ“ KPMG Business Measurement Process
The KPMG Business Measurement Process (BMP) adopts the Strategic System Audit way where the focus of risk evaluation is transformed from purchase risk orientation to a proper client business risk alignment by building an expectation regarding the client's performance through deeper familiarity with its business dynamics. There are five principles of organization monitoring and measurement for BMP, namely, 1) tactical analysis, 2) business method analysis, 3) business way of measuring, 4) risk assessment and 5) ongoing improvement. The relationships among the list of five guidelines are illustrated in...
Recommendations: 1 . Bell, T., Farrenheit. Marrs, I actually. Solomon, and H. Jones. 1997. Auditing Organizations By using a Strategic-Systems Zoom lens. New York: KPMG Peat Marwick LLP
2 . Curtis, Electronic., & Turley, S. 2006. The business risk audit вЂ“ a longitudinal case study of the audit proposal. Working newspaper.
3. Showmanship Media Corp. 2006. Form 10-K Gross annual Report
four. J. Deb. Sterman. 2000. Business dynamics: Systems thinking and modeling for complex world. Irwin McGraw-Hill.
a few. Knechel, Ur. W. june 2006. The business risk audit: Origins and hurdles (and options? ). Operating paper. School of Fl
6. Merle Erickson, Brian Mayhew, and William L. Felix. 2150. Why Carry out Audits Are unsuccessful? Evidence by Lincoln Personal savings and Loan, Journal of Accounting Analysis
7. Investments and Exchange Commission (SEC). 2003. Statement pursuant to Section 704 of the Sarbanes-Oxley Act of 2002.
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