Detailed instruction is attached
ACCT-422 10-K Project Instructions
ACCT 422 SEC 10-K Audit Plan
In Auditing, the SEC 10-K project focuses on US-Based corporations and the development of an Audit plan. These will be based on information found in the financial statements, annual reports, and disclosures of the SEC 10-K filing of a corporation. Using knowledge learned in introductory accounting courses, you will: (1) review the SEC 10-K Report of a U.S. Corporation with subsidiaries; (2) review their annual reports for the prior two years and the current year; (3) develop an audit plan using the SEC 10-K Reports.
ACCT 422: Auditing SEC 10-K Project Requirements
Summary: This SEC 10-K project challenges you to review, analyze, and interpret financial statements and disclosures of a U.S. corporation headquartered in the U.S. To simulate processes used by practicing accountants, you present analyses and findings to the class and participate in a peer-review process in the Discussions area. The deliverables are in response to information and analysis requests by your supervisor.
Outcomes: Prepare discussion postings and reports on a U.S. publicly traded corporation with subsidiaries using its most current SEC 10-K report.
Competencies: Demonstrate ability to develop a comprehensive audit plan and present the plan and associated Points to the Audit Manager.
Project Explanation: You are the new auditor for the SEC 10K company you selected and approved by the professor. Another auditor performed the audit last year.
As the new auditor, you are to develop a comprehensive audit plan. The auditing standards describe the components of what is to be included in an audit plan.
You are to describe accounting and auditing issues in the audit that you will face as the new auditor. You are to identify the company’s risks, how these risks will affect the audit, and how you will mitigate the risks. For example, if you select a company with overseas manufacturing plants that produce inventory, what approach will you take to observe the inventory in the U.S. and overseas? What will you include in your audit plan? The purpose of the report is to write an audit plan. Note that this report is to be written from an auditor’s perspective and not from an analyst’s perspective performing an analysis of a company’s financial statements. The perspectives are quite different.
The deliverable should be five to seven pages, single-spaced, with APA format for citations and references. Data visualization, small charts, and your commentary are included in the page count. Financial statements are not included in the page count. The APA citations can be single-spaced.
You must have a reference list including the link to the SEC-10K and learning resources for this course. You must include and discuss graphics or charts in your report.
Write in your own words. A report with excessive quotations is not in your own words. Consider the academic honesty assignment for our course. Write to show your mastery of concepts and topics for our course.
You must provide a brief background of the company and the industry. The report must be appropriately organized with an introduction, body, and conclusion.
Address issues associated with the specific industry and operational of your U.S. Corporation.
Assessments: Assessments will include a Word document report and a PowerPoint presentation based on the Word document.
1. Microsoft Word 10K report:
Estimated length: five to seven (5-7) pages
Use bullet lists, create data visualization and charts to accompany your commentary
1-inch margins top & bottom; 1 to 1.25 inches on left & right sides
Line spacing: single spacing with double spacing between paragraphs
Font size: 12 CPI
Font style: Times New Roman
Format: APA 7th Edition
In-text Citation: Must include page number and paragraph.
Save the file with YOUR NAME in the file name.
2. Microsoft PowerPoint presentation:
Prepare your slides to make a formal presentation to the senior management team of your corporation focusing on audit readiness and issues. Be creative and present an overview and meaningful consolidation information to support decision-making by corporate executives and other key personnel internally at your corporation. Use your judgment to select the consolidation accounting-related highlights for your presentation.
Save the file with YOUR NAME in the file name.
Selected Company: Walmart
Walmart’s SEC 10-K link:
SEC 10-K Project must answer each questions below.
1. What ethical and legal liability relating to accountants and auditors might relate to your SEC 10-K company?
2. What trends in sales, cost of goods sold, and gross profit do you see? Create a small table for your records and refer to percentages in terms of year to year change for dollar values and the gross profit percentage.
3. Review net income and post comments using the techniques you used for gross profit.
4. International Issues: comment on foreign currency issues and the global picture for your SEC 10-K company.
Read the Notes to the Financial Statements (FS) for your SEC 10-K company. These “notes” are displayed after the financial statements.
1. Inventory comments: comment on inventory issues using the concepts of materiality and geographic location.
2. Inventory and Sales: comment on issues related to diversity in customer base and issues of internal control.
3. Accounts Receivable and Sales: comment on issues related to the selling and distribution system of your SEC 10-K company and issues of fraud as well as internal control.
4. Challenges and opportunities you see as you relate our auditing topics to your company. Details are high level in the SEC 10-K but organizations rely on Auditing concepts, as they prepare for the audits and as part of their internal control process.
The financial statements for your company are usually posted in Item 8 of the SEC 10-K document. The management discussion and analysis section is earlier in the report.
1. The management of risk and uncertainty is often included in the MD&A section comments. What do you learn of interest here?
2. Divisions and Product Lines may be discussed in the MD&A section. What audit and internal control issues may arise in these areas as you consider our chapters for the week.
3. Management often explains higher or lower than expected in their comments. Discuss the profitability and other comments in the MD&A section as they relate to our chapters thus on audit strategy, risk, internal control, materiality, and management.
Using the SEC 10-K for your company, answer the following questions from the auditor perspective:
1. Costs and fluctuations are often discussed in the MD&A section. Any comments on your analysis here?
2. Supply Chain Management is an increasing concern for all organizations. What do you learn from your review of MD&A?
3. Environmental, Social, and Governance (ESG) and Sustainability relate to many issues including pollution and the cost of remediation and hazardous wastes. What do you learn about these topics from the SEC 10-K?
4. Contingencies and liabilities: can they be estimated? Are they probable to occur? What do you learn about your company in this area? Do these issues appear as critical audit matters for your company?
As our course topics focus on specific audit issues, identify steps to audit each of the following:
Audit of the Acquisition and Payment Cycle: Tests of Controls and Substantive Tests of Transactions, and Accounts Payable
Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts
Audit of the Payroll and Personnel Cycle
Audit of the Inventory and Warehousing Cycle
Audit of the Capital Acquisition and Repayment Cycle
Audit of Cash Balances