Explore BrainMass

Sample audit program

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Newham, Inc.
Test of Controls Results - Revenue
December 31, 2015

Of the 213 sales transactions examined, 82 "deviations" were identified:

• No credit approval was found on 42 sample items
• The wrong quantity billed was identified on five sample items
• There was a mathematical error on 10 sample items
• No shipping document could be located for 25 sample items

Following are the procedures used:

1. We randomly chose the sample of 216 transactions across the year with 18 from each calendar month.
2. All of the invoices in the sample were found. None were missing.
3. All of the invoices were properly posted to the general ledger sales and accounts receivable control accounts, and each was posted to the right customer's individual account.

© BrainMass Inc. brainmass.com December 20, 2018, 12:46 pm ad1c9bdddf


Solution Preview

Business Risk Analysis
Newham Company is a publicly traded company operating the personal product industry. The company manufactures cosmetics and body care products which are sold to large retail chain stores like Walmart and Target. The industry in which Newham operates is highly competitive. Large multinational companies dominate the beauty and personal care in the US as they can afford to spend millions on advertising and invest in research and development (Euromonitor, 2015). Smaller companies which offered distinctive products like natural and organic products gained some recognition because of interest of Americans in natural beauty. There is a positive forecast for the industry as US economy is expected to grow resulting in greater disposable income. Higher income would allow people to buy more beauty and personal care products.
The cosmetics and personal care industry and hence Newham Company is vulnerable to consumer ire as health issues emerge related to use of their products. Some of the commonly used ingredients which are used in manufacture of beauty and personal care products have been found to pose serious health risks. Customers are prone to skin penetration, inhalation and ingestion of these ingredients. There have been numerous cases where companies have fallen to being irresponsive to customer fears. Newham has also faced a lawsuit which was filed based on claims that a new product led ...

Solution Summary

Sample audit plan has been prepared for Newham Company.