look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it

Millstone 2 -Audit Program - Internal Controls for Cash

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Audit Program Plan 

             Robbins Network Services has established itself well with business owners that have clear roles and responsibilities for all members. However, evaluation to ensure internal controls for cash are stable is necessary. External controls components such as political temperature and governance get not considered as they are out of reach of the management (Nouri and Gilaninia, 2017). Internal decision-making processes are the most vital elements in the success of a business. Therefore, this paper will create an audit for the internal controls of cash for RNS and ensure gaps and inconsistencies get revealed.

First, I will do a walkthrough that includes documented policies and procedures for account receivables and company treasury policies and bank statements. 

 The program will run for one year, and each month of the year will get dedicated to specific activities in the internal control components. Understanding the background of the business, its suppliers, customers, and stakeholders will ensure the organizational culture gets captured (Yang et al., 2019). They will be taken if the business utilizes information technology software and application to achieve its cash management objectives. Reviewing transactions for the RNS entity's particular period is vital to ensure accurate future earnings. The five people involved in running the day-to-day activities at Robbins Network Services should understand that their roles and responsibilities depend on their attitude towards the business. When reviewing cash reports, integrity and ethical values are needed (Sitcha et al., 2019). If there are gaps and discrepancies in the business's cash flow, the oversight roles of the five active owners require them to investigate it. If the other stakeholders realize that the five owners are not accountable for managing cash, then the business continuity probability for RNS will be below.

The company also has foreign currency translation that requires a distinct audit process for cash receipts. We can review ASC Topic 830, Foreign Currency Matters, to determine how to audit those. This procedure involves using a computer "and reviewing a statement of cash flows by allocating changes in cash flows from the effects of foreign-currency rates among individual cash flow line items" (Spencer & Richards, 2012).

 Information and Communication

            In January, communication strategies will get reviewed. The first activity will ensure periodic external reviews get reported through the proper channels. Communication at all levels of an organization plays an integral part in ensuring cash management processes are understood. At RNS, the five active owners should reach out to the stakeholders when new technologies increase transparency and accountability get found (Nouri and Gilaninia, 2017). In the second month of February, remediation and challenges experienced in the previous year will be reviewed. Internal check systems resilience should be evaluated to prevent downtimes that might negatively affect cash management. Fraud in cash management is the most common problem in many businesses; SOX provides an official channel to report these.

Risk Assessment

            In March, risk assessment activities will be done. Balance sheet management techniques will be evaluated. Cash transactions have many risks associated with them that many businesses will need an accounting system to alert them of any inconsistency. In the past, many businesses depended on an auditor who would manually analyze financial transactions and books, but today automation has made it easy to see errors (Yang et al., 2020). The main objective of RNS was to ensure recorded financial transactions were consistent with the objectives of risks management. In April, risks assessment procedures will also ensure fraudulent activities are flagged. The significant risk that RNS can experience is an overstatement of payments. The five owners are responsible for setting risks assessment procedures that will deter the theft of cash and make sure who has access to a cash account.

 Control Activities

            In June, control activities will be carried out. Accounting recording techniques will be tested, and parameters to assess the effectiveness of cash management techniques will be analyzed. The tools that help RNS achieve its mission statement are vital for the success of a business. In July, cash payment journals will be utilized, and if cheques paid and invoices figures do not match, transactions can be flagged. The cash management systems will be operational by August, making it easy to obtain cash balances from financial institutions (Samadara et al., 2021). If the cash management auditing tools such as reconciliation software do not meet the needs of RNS, then losses are inevitable. In September, the audit will still be in the control activities as investigations to the payments paid to business partners will be evaluated. Gaps get expected, although the disclosure of cash held will be accurate. If explanations and reviews are provided for suspicious payments, the audit will proceed to other internal control components. Maximum utilization of resources remains a top priority. 

 Control activities are vital in cash management techniques as many of the tools applied might not respond to essential cash elements such as invoices and paid cheques. Therefore, preparing a report on the evaluation of bank statements will be the final say on whether ethical standards in the business have been maintained (Sitcha et al., 2019). If there is a need to involve authorities if fraud gets seen, the management will decide. A single employee should only manage the receipts book; otherwise, inconsistencies will tamper with the records' accuracy. 

 Monitoring Activities

            In November and December, monitoring activities will get planned and implemented. Achievement of organizational objectives will be the main parameter that will measure performance (Sitcha et al., 2019; Yang et al., 2020). Communication with the recruitment department is needed to ensure organizational development programs at Robbins Network Services meet the needs of the industry. The gaps in cash management will be tackled at this stage.

References

Chen, H., Yang, D., Zhang, J. H., & Zhou, H. (2020). Internal controls, risk management, and cash holdings. Journal of Corporate Finance, 64, 101695.

Spencer, S. l, & Richards, G. e. (2012, February 1). Three common currency-adjustment pitfalls. Journal of Accountancy. Retrieved December 11, 2021, from https://www.journalofaccountancy.com/issues/2012/feb/20113891.html.

Nouri, S., & Gilaninia, B. (2017). The effect of surplus free cash flow and audit quality on earnings management. International Journal of Economics and Financial Issues, 7(3), 270.

Reinamah, C. M., Siahaan, M. Y., & Samadara, S. (2021, April). Design of Accounting Information Systems of Cash Receiving and Expenditure in Improving Internal Control of Income of Weaving Tie MSME in the District South Central Timor. In International Conference on Applied Science and Technology on Social Science (ICAST-SS 2020) (pp. 527-530). Atlantis Press.

Wadesango, N., Tinarwo, N., Sitcha, L., & Machingambi, S. (2019). The impact of cash flow management on the profitability and sustainability of small to medium sized enterprises. International Journal of Entrepreneurship, 23(3), 1-19.