RNS Company Audit Report

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Assurance services are used in financial reporting to provide assurance to the financial statement’s users, that helps to ensure the balance sheets are not material misstated and provide comfort to the reader. The three main assurance services types are audit, review, and compilation. An audit is an independent examination of an organization’s balance sheet whose purpose is expressing a fair opinion of the balance sheet. Review is a limited examination, purposing to the provision of a reasonable assurance that the financial statements are not misstated materially. Compiling is the preparation of financial statements by an accountant in accordance with the accounting principles. Compilation serves the purpose of assisting the management in presenting financial information in financial statements form.

(I) RNS Internal Control Analysis.

1.Robbins Network Solutions (RNS) has several significant financial business transactions. These transactions include providing network solutions and services to customers, selling products and services, and providing support and maintenance services. RNS also has other financial transactions, such as paying salaries and benefits to employees, paying taxes to the government, and paying interest on loans. The financial transactions of RNS are typically presented in financial statements and are audited, reviewed, or compiled by an independent accountant. The auditor can also use the financial statements to assess the internal controls of RNS (Frazer, 2020).

2.On the other hand, RNS may be subject to risks that may alter their financial statements. The three audit risks that RNS may be subject to include: Inherent risk: This type of risk is based on the nature of the business’s industry. RNS is a network solutions provider, so there is a risk that some of its solutions may not work as intended or that the answers may not be compatible with the customer's existing infrastructure. Control risk: This type of risk is based on how effective the company's internal controls are. If RNS does not have an effective system to track and manage customer orders, there is a risk that the fulfillment of charges may not be on time or that customer information may be compromised. Fraud risk is based on the possibility of fraudulent activities within the company. For example, if RNS employees can access customer credit card information, there is a risk that they may use this information to make unauthorized purchases.

 The highest business risks associated with RNS are control risk and fraud risk because they have the potential to cause the most financial damage to the company. Control risk can lead to lost revenue and increased expenses, while fraud risk can lead to criminal charges and damage to the company's reputation. The internal controls of RNS are designed to minimize the fraud risk ensuring that customer orders are fulfilled on time. Some rules include using strong passwords, access limitations to customer information, and requiring employees to undergo background checks.

3. The network industry's internal control measure that, includes using strong passwords, access limitation to customers' information, and employees undergoing background checks is essential in preventing fraud and ensuring timely fulfillment of customer orders.
4. Some ethical issues involved with RNS and the network solutions industry include the potential for conflict of interest, the need for confidentiality, and the need for objectivity. RNS could address these issues by ensuring that the auditors are independent and objective and that all confidential information is appropriately safeguarded.
5. Several current events could impact RNS in the future. The EU's GDPR could significantly impact RNS if the company violates the regulation. The GDPR requires companies to protect the personal data of EU citizens, giving them the right to know the personal data collected about them. The increasing popularity of cloud-based solutions could also impact RNS. As more companies move to the cloud, RNS may find competing difficult.

(II) Control Environment.

1. The audit program aims at assessing the internal controls over cash, including an evaluation of the control of environment, assessment of risk, activities control, communication, and monitoring. The control environment sets the tone for a company and its ability to oversee risk. It includes the company's philosophy, operating style, policies, procedures, and processes to manage risk. Auditors should review the control environment to ensure that it is conducive to effective internal control. A risk assessment identifies and assesses the risks faced by an organization. This step is critical in developing an effective internal control system, as it helps to identify the areas where controls are needed. Control activities are the measures and procedures the management sets to mitigate risks and ensure that the organization's objectives are achieved. These activities are authorizations and approvals, segregation of duties, and physical controls. Information and Communication systems are essential for an effective internal control system. They provide how information is shared among employees and management and allow for the flow of communication between different levels of the organization. Monitoring is assessing the effectiveness of internal controls and acting to improve them if necessary. It includes periodic reviews, as well as ongoing monitoring of control activities.

(III) Audit risk, Audit evidence, and Financial statement assertions relationship.

1. The audit team will review the sales data for the company. This data is crucial because it will help determine whether the company is achieving its sales targets. It will also help to identify any sales data trends that may indicate future problems. The audit team will also review the company's financial statements. This data is essential because it will help determine whether the company is financially sound. It will also help identify areas where the company may be overspending or underperforming. Finally, the audit team will review the company's employee records. This data is crucial because it will help determine whether the company complies with labor laws. It will also help identify areas where the company may be overstaffed or understaffed (Rimmel, 2020).
2. Sampling is a statistical method used in selecting a representative sample from a population. The sample can then be used to test hypotheses or to estimate population parameters. The audit team must consider the governing rules and regulations of the country where the data is located. They must also consider the rules and regulations of the auditing firm. The country's governing rules and regulations include the country's laws and regulations and the country's accounting standards. However, the auditor can compensate for risk by sampling data from overseas and beyond reach.
3. Reviewing the sampling plan to ensure that it is adequate for the population being sampled: This procedure involves reviewing the proposed sampling plan to ensure effectiveness for the people being tested and includes considering the size of the population, the desired precision of the results, and the available resources. Select a random sample of the population studied that will ensure that all members have an equal chance of being included in the sample. Calculate the statistics for the sample, including the mean, median, mode, and standard deviation. Comparing the sample results to the population helps to determine if the sample represents the people. Adjust the sampling plan as necessary: This may include changing the sample size or the sampling method. Internal control evaluation will affect this step by ensuring that the sampling plan is adequate for the sampled population, including considering the size of the people, the desired precision of the results, and the available resources (Kend & Nguyen, 2022).
4. Financial statements provide information on the company's finances, income, expenses, assets, liabilities, and equity. Operating records indicating the company's operations, including sales, purchases, inventory, and payroll, contracts showing information on the company's agreements with suppliers, customers, and other businesses, correspondence providing information on the communications with suppliers, customers, and other firms and minutes of meetings which will provide information on the company's decision-making process.
5. Some considerations that will be made in subjective auditing areas are; the subject matter that will affect the proof type required to support the conclusions. Auditors must obtain financial statements and other financial records in case of financial subject matter. The level of subjectivity will affect the type of evidence that is necessary to support the conclusions. For instance, auditors must obtain more evidence to support their findings if the subject matter is highly subjective. The governing rules and regulations will affect the type of evidence that is necessary to keep the conclusions. Auditors must obtain that evidence if the governing rules and regulations require specific proof.

Factors to consider when planning nature, extent of audit documentation.

6. Size and complexity of an entity being audited: The larger and more complex the entity, the more required audit documentation. Nature of audit procedures: This refers to audit procedures performed type. If there are more complex procedures, more documentation would be required. The entity's risk assessment: More audit documentation would be required if the auditor assessed the company as high risk. The audit results: If there are any significant findings, more documentation will be required. The judgment from the auditor: The auditors use their decision to determine the extent and nature of the audit documentation.
7. The definition of IT risk coverage responsibility adequately addresses the recent and upcoming risks related to social media since the directors’ board, or senior executive is accountable for ensuring the firm has appropriate measures to mitigate IT risks. They are also responsible for overseeing these measures' implementation and monitoring the effectiveness of risk mitigation efforts (Otero, 2018).
8. Internal controls to protect computer data and proprietary information include access control measures, data backup, recovery procedures, and reliability measures. The rules operate well within IT because the board of directors or senior executive is accountable for ensuring that the firm has appropriate policies and procedures to mitigate IT risks. They are also responsible for overseeing these measures' implementation and monitoring the effectiveness of the risk mitigation efforts.

9.There are several current and future vulnerabilities in IT. These vulnerabilities include social media, cyber security, and data privacy risks. To manage these gaps, the board of directors or senior executive ensures that the company has appropriate policies and procedures to mitigate IT risks (Lamboglia et al, 2020).

References

Frazer, L. (2020). Does internal control improve the attestation function and by extension assurance services? A Practical Approach. Journal of Accounting and Finance, 20(1), 28-38.

Kend, M., & Nguyen, L. A. (2022). The emergence of audit data analytics in existing audit spaces: findings from three technologically advanced audit and assurance service markets. Qualitative Research in Accounting & Management, (ahead-of-print).

Lamboglia, R., Lavorato, D., Scornavacca, E., & Za, S. (2020). Exploring the relationship between audit and technology. A bibliometric analysis. Meditari Accountancy Research.

Otero, A. R. (2018). Information Technology Control and Audit. Auerbach Publications.

Rimmel, G. (2020). Sustainability audit and assurance. In Accounting for Sustainability (pp. 180-192). Routledge.