Auditing Practice

Running head: AUDITING PRACTICE
Auditing Practice
Name of the student:
Name of the university:
Author Note:

1AUDITING PRACTICE
Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................3
Answer to Question................................................................................................................3
Conclusion..................................................................................................................................8

2AUDITING PRACTICE
Introduction:
The aim of the assignment deals with the case study of the restaurant in Seal Beach
and where Aaron entered into an agreement with a Californian grocery business whereby he
agreed to pay the grocery business to advertise his Seal Beach restaurant on the back the
receipts distributed by the grocery store. Such types of marketing strategies are common and
are best described as coupon advertising. Later it is found that advertising to be a very cost-
effective marketing strategy which increased the sales in the business over the first 12
months. The turnaround point in the case study is that Aaron has noticed a significant fall in
sales at the Seal Beach restaurant which is further a matter of great concern for him. Then
Aaron conducted a covert operation by hiring Maxwell Smart as an internal auditor to solve
the relevant case related to fraud and error.

3AUDITING PRACTICE
Discussion:
Answer to Question
A)
An auditor is hired in order to find the fraudulent act and also the reason behind it. In
order to detect the fraud, the auditor needs to find out the appropriate reason behind such
decrease in the sales of the Seal beach Restaurant. Analyzing the covert operation in a
detailed manner which happened inside the restaurant is significant in case of the auditor. In
case the duty of the internal auditor it is further required to check the fraud and circumstances
of such kind of decline in the sales of the Seal Beach Restaurant (Krishnan, Krishnan and
Song 2016).
The responsibility of the auditors is to check the receipt of the sales and cashes
associated with the business. The detailed report of the financial statement must be analyzed
thoroughly in order to find out the internal glitches in the system. The reasonable assurance
must be gathered from the financial statements and further it is needed to check that the
statements are free from material misstatements or any kind of frauds. When a fraud is
detected, then the risk assessment procedures are conducted in order to identify the risk
associated with such fraudulent act. Detailed documentation and further testing the internal
audit controls plays significant role in the audit procedure techniques (Lennox, Wu and
Zhang 2016).
B)
In case of performing audit the auditor must be independent and apply techniques
which are associated in the audit process. The internal auditor must contain relevant
knowledge regarding the actual or suspected fraud. Independence plays significant part in the
truth and an objective approach in the audit process. Independence in the internal auditor