Zakat adalah sedekah yang wajib dikeluarkan umat Islam menjelang akhir bulan Ramadhan, sebagai pelengkap ibadah puasa. Zakat merupakan salah satu rukun ketiga dari Rukun Islam. Menurut Psak No. 109, Zakat adalah harta yang wajib dikeluarkan oleh muzakki sesuai dengan ketentuan syariah untuk diberikan kepada yang berhak menerimanya (mustahiq).

Infaq adalah mengeluarkan harta yang mencakup zakat dan non zakat. Infaq ada yang wajib dan ada yang sunnah. Infaq wajib diantaranya adalah zakat, kafarat, dan nadzarl. Sedangkan Infak sunnah diantaranya adalah infak kepada fakir miskin sesama muslim, infak bencana alam, dan infak kemanusiaan. Menurut Psak No.109, Infak/sedekah adalah harta yang diberikan secara sukarela oleh pemiliknya, baik yang peruntukannya dibatasi (ditentukan) maupun tidak dibatasi

Shadaqah adalah pemberian harta kepada orang-orang fakir-miskin, orang yang membutuhkan, ataupun pihak-pihak lain yang berhak menerima shadaqah, tanpa disertai imbalan , tanpa paksaan, tanpa batasan jumlah, kapan saja dan berapapun jumlahnya. Shadaqah ini hukumnya adalah sunnah, bukan wajib. Karena itu, untuk membedakannya dengan zakat yang hukumnya wajib, para fuqaha menggunakan istilah shadaqah tathawwu’ atau ash shadaqah an nafilah (Az-Zuhaili 1996: 916). Sedang untuk zakat, dipakai istilah ash shadaqah al-mafrudhah (Az-Zuhaili 1996: 751).

Pada uraian Az-Zuhaili (1996: 916), hukum sunnah ini bisa menjadi haram, jika diketahui bahwa penerima shadaqah akan memanfaatkannya pada yang haram, sesuai kaidah syara’ “Al wasilatu ilal haram haram, segala perantaraan kepada yang haram, hukumnya haram pula”. Hukum shadaqah dapat juga menjadi wajib, misalnya untuk menolong orang yang berada dalam keadaan terpaksa yang amat membutuhkan pertolongan, misalnya berupa makanan atau pakaian. Menolong mereka adalah untuk menghilangkan kesusahan dan penderitaan mereka wajib hukumnya. Jika kewajiban tak dapat terlaksana kecuali dengan shadaqah, maka shadaqah menjadi wajib hukumnya,

Kemiskinan di kalangan masyarakat, menurut beberapa pakar ekonomi disebabkan oleh beberapa faktor, diantaranya; 1) Korupsi yang marak di Indonesia, sehingga pendanaan terhadap sarana dan prasarana negara secara tidak langsung berkurang. 2) pengelolaan sumber daya alam (SDA) yang kurang hati-hati, sehingga berimplikasi kepada habisnya SDA yang ada sekarang di Indonesia dan banyak menimbulkan bencana alam seperti longsor, gempa bumi, dan banjir. 3) kesalahan kebijakan pemerintah, yang terlalu dini tanpa memperhatikan aspek Usaha Mikro, Kecil dan Menengah. Sebagai contoh investasi di Indonesia diserahkan secara penuh kepada kebijakan globalisasi yang berefek pada ketimpangan ekonomi, karena secara tidak langsung usaha Mikro, kecil, dan Menengah akan jarang tersentuh. 4) kesalahan sistem ekonomi Indonesia, yakni ekonomi kerakyatan yang bertumpu pada sistem ekonomi kapitalis yang justru lebih memihak individu manusia, sehingga berdampak timbulnya rasa egoisme yang tinggi dari individu manusia itu sendiri tanpa memperhatikan mayoritas rakyat Indonesia yang kurang mampu.

Syariah mengakui adanya ketidaksamaan ekonomi antar orang perorangan, Karena dapat disadari di dunia ini ada orang yang mampu dan yang kurang mampu dalam memenuhi kebutuhannya sehari-hari, Sehingga konsekuensi adanya dana untuk digunakan bersama haruslah ada sebagai penyeimbang dari ketidaksamaan ekonomi tersebut. Zakat merupakan salah satu instrumen yang digunakan dalam menyeimbangkan perekonomian suatu Negara. Dalam zakat telah diatur beberapa ketentuan yang harus dibayarkan meliputi :

a. zakat harta merupakan zakat barang niaga dan zakat barang tambang, zakat profesi, zakat binatang ternak dan zakat pertanian

b. zakat fitrah merupakan kewajiban membayar zakat yang dilakukan ketika bulan suci Ramadan.

Ketentutan zakat tersebut di atas semuanya ditujukan bagi orang-orang yang sudah memiliki harta lebih sesuai dengan syarat-syarat yang telah ditetapkan dalam fiqh. Realisasi dari pernyataan bahwa zakat dan bentuk sedekah sunnah yang lain sebagai penyeimbang ekonomi dapat dilihat dari penggunaan dana-dana dari zakat, infaq dan sedekah tersebut, yang pada umumnya digunakan menyantuni orang-orang yang kurang mampu dalam memenuhi kebutuhan sehari-harinya, sehingga ketidaksamaan ekonomi dari masyarakat tersebut masih dapat diatasi.

Dalam Islam dikenal beberapa bentuk insentif bagi perekonomian yang sangat unik bagi masyarakat miskin yaitu zakat, infak dan shadaqah. Zakat bersifat wajib, sedangkan infak dan shadaqah bersifat sukarela. Keduanya berperan sebagai instrument pemerataan pendapatan dalam mencapai perekonomian yang berkeadilan. Berdasarkan hal tersebut optimalisasi zakat, infak, dan shadaqah merupakan potensi strategis untuk menunjang pembangunan ekonomi Indonesia dalam mewujudkan kesejahteraan yang sesungguhnya, yaitu secara lahir dan batin di era otonomi daerah. Zakat, infak, shadaqah sebagai instrument fiskal dalam sistem ekonomi Islam, mempunyai potensi dalam menghentikan permasalahan kemiskinan. Melalui peran kelembagaan, ketiga instrument yakni zakat, infak, dan shadaqah dapat dikemas menjadi program pengentasan kemiskinan yang bernilai edukatif, religius, sosial dan kewirausahawan.

Zakat, sebagai rukun Islam yang ketiga, merupakan instrumen utama dalam ajaran Islam, yang berfungsi sebagai distributor aliran kekayaan dari tangan the have kepada the have not. Ia merupakan institusi resmi yang diarahkan untuk menciptakan pemerataan dan keadilan bagi masyarakat, sehingga taraf kehidupan masyarakat dapat ditingkatkan. Pelaksanaan zakat secara efektif adalah melalui organisasi pengelola zakat. Dalam Bab III Undang-Undang No. 38 tahun 1999, dikemukakan bahwa organisasi pengelola zakat terdiri dari dua jenis, yaitu Badan Amil Zakat (pasal 6) yang dibentuk oleh pemerintah dan Lembaga Amil Zakat (pasal 7) yang dibentuk oleh masyarakat.

Lembaga-lembaga amil zakat dimaksud tentunya diharapkan berfungsi secara efektif

dan efisien dalam mengemban misi dan tujuan institusional sebagaimana dikehendaki oleh

undang-undang. Untuk itu, diperlukan proses pengelolaan yang mantap di setiap Lembaga Amil Zakat, terutama perannya sebagai agen pemberdayaan ekonomi umat. Proses pengelolaan tersebut meliputi pengumpulan dan pendistribusian. Pengumpulan berkaitan dengan tugas Lembaga Amil Zakat berhubungan dengan muzakki (pemilik harta yang wajib zakat), sedangkan pendistribusian berkaitan dengan tugas Lembaga Amil Zakat dalam mendistribusikan harta zakat terhadap mustahiq (penerima zakat).

Menjadikan zakat sebagai suatu sistem pemberdayaan ekonomi umat berarti zakat harus didistribusikan secara produktif. Tentu saja memerlukan pengelolaan zakat oleh lembaga amil zakat yang baik pula. Upaya untuk memantapkan pengelolaan lembaga-lembaga Amil Zakat sebagai suatu sistem pemberdayaan ekonomi umat islam yang menghajatkan pengkajian mengenai dimensi-dimensi sistem pendistribusian zakat pada lembaga-lembaga Amil Zakat itu sendiri. Sistem pendistribusian yang tepat guna dan efektif serta profesional akan membantu masyarakat terlepas dari kemiskinan.

Referensi

Heryani ,Dahlia. 2005.“Studi Penerapan Akuntansi Zakat Pada Lembaga Amil Zakat  Studi Kasus Pada Laz Pt. Semen Padang  Dan  Lazis Universitas Islam Indonesia”.

Khoirul Waf ,Muhammad Agus. 2006.“ Ekonomi Syariah Sebagai Fondasi Ekonomi Kerakyaratan Untuk Mencapai Indonesia Yang Sejahtera”.

Meylani, Wina.2009.“Analisis Pengaruh Pendayagunaan Zakat, Infaq, Dan Shadaqah Sebagai Modal Kerja Terhadap Indikator Kemiskinan Dan Pendapatan Mustahiq”.

Member :

• Delvita Dita Putri Anggrayni (20207269)
• Shelly Huzaynah (21207019)
• Sri Wahyu Handayani (21207047)
• Windy Atmawardani Rachman (21207174)

Object             : Manufacturing Accounts Payable Department

Klien               : Anthoni CPA

14-29

A. By using nonstatistical sampling Column Planned Audit Actual Result ARACR TER Sample Size Population  Size Number of Exception SER Calculate sampling Error 1 10 5% 200 5000 4 2% 3% 2 5 5% 200 5000 4 2% 3% 3 5 5% 50 5000 1 2% 3% 4 5 5% 200 50000 4 2% 3% 5 5 5% 100 500 2 2% 3% 6 5 5% 100 900 10 10% -5% 7 5 5% 100 5000 0 0% 5% 8 5 5% 25 500 0 0% 5%

B. By using attributes sampling from the appropriate table Column Planned Audit CUER ARACR Population  Size Sample Size Number of Exception 1 10 5000 200 4 4.0 2 5 5000 200 4 4.6 3 5 5000 50 1 9.2 4 5 50000 200 4 4.6 5 5 500 100 2 6.2 6 5 900 100 10 16.4 7 5 5000 100 0 3.0 8 5 500 25 0 11.3

C. 1. Decrease in ARACR CUER Increase 2. Decrease in Population Size CUER Increase 3. Decrease in Sample size CUER Increase 4. Decrease in number of exception CUER Increase

D. Sample size and number of exception have the greatest effect on the CUER, population size has the

least effect on the CUER

E. It is necessary to compare the CUER with the TER because the auditor need to analyze the individual exception

to find the weakness of internal control

For Complete document,click Chapter 14 (14-29)
]]> http://ndhiemanisz.wordpress.com/2010/02/03/a-02-chapter-14-14-29/feed/ 0 Windy Atmawardani Rachman http://ndhiemanisz.wordpress.com/2010/02/03/a-02-chapter-14-14-28/ http://ndhiemanisz.wordpress.com/2010/02/03/a-02-chapter-14-14-28/#comments Wed, 03 Feb 2010 05:08:39 +0000 Windy Atmawardani Rachman http://ndhiemanisz.wordpress.com/?p=354 ]]>

14-28

A. By Using Judgement Column Planned Audit Actual Result ARACR TER EPER Population  Size Initial Sample 1 10 6 2 1000 90 2 5 6 2 100000 120 3 5 5 2 6000 140 4 5 6 2 1000 100 5 10 20 8 500 50 6 10 20 2 500 40 7 5 2 0 1000000 180 B. By Using attributes sampling from the appropriate part of table 14-28 Column Planned Audit Initial Sample Size ARACR TER EPER Population  Size 1 10 6 2 1000 88 2 5 6 2 100000 127 3 5 5 2 6000 181 4 5 6 2 1000 127 5 10 20 8 500 25 6 10 20 2 500 18 7 5 2 0 1000000 149 C. 1. An Increase in ARACR   = Decrease in Initial Sample Size 2. An Increase in the TER    = Decrease in Initial Sample Size 3. An Increase in the EPER     = Increase in Initial Sample Size 4. An Increase in the population size = Increase in Initial Sample Size D. Because there are different in ARACR, TER and also there’s a huge different in Population Size E. ARACR and TER have the greatest effect on the initial sample size and population size has the least effect on

the initial sample size F. Because the exceptions in the actual sample must be evaluated before it is possible to know whether

the sample is sufficiently large to achieve the objectives of the test.

For complete document, click Chapter 14 (14-28)

SMAK01-7

Auditing 2

1. How does IT governance fit into an organization’s overall governance?

Answer :

IT governance fit into an organization’s overall governance by The certification has been specifically developed for professionals who have a significant management, advisory, or assurance role relating to the governance of IT. The certification promotes the advancement of professionals who wish to be recognized for their IT governance-related experience and knowledge.

The certification is also intended to support the growing business demands related to IT governance, increase the awareness and importance of IT governance good practices and issues and define the roles and responsibilities of the professionals performing IT governance work

Beside that This certification will benefit the individual, through recognition of their professional knowledge and competencies; skill-sets; abilities and experiences, and will enhance their professional standing. It will also add value to the enterprises they support through the demonstration of a visible commitment to excellence in IT governance practices.

Source: http://www.isaca.org/Template.cfm?Section=CGEIT_Certification&Template=/TaggedPage/TaggedPageDisplay.cfm&TPLID=16&ContentID=36126

2. The Executive Summary makes five recommendations for management with respect to IT. What are these recommendations?

Answer  :

Recommendations for management with respect to IT consist of :

• Establish an overall cross-functional compliance team and a dedicated sub team managed by a director level person. The team should be supported by C-level executives and include executive from finance, IT, legal, marketing and affected business units.
• Coordinate IT activities within the scope of an overall security and disaster recovery plan.
• Have Finance or Audit take final responsibility to ensure compliance with SOX. Marketing should take the lead on customer data usage decisions affecting privacy as well as the Do Not Call Registry. IT is one input to the whole process.

Source : http://74.125.153.132/search?q=cache:Nhv8GFfqsaMJ:searchcio.techtarget.com/searchCIO/downloads/C_Braunstein_EDITED.ppt+How+does+IT+governance+fit+into+an+organization%E2%80%99s+overall+governance&cd=2&hl=id&ct=clnk&gl=id&client=firefox-a

3. How would an auditor likely view a company’s IT environment if the organization had implemented the above recommendations?

Answer :

An auditor likely view a company’s IT environment if the organization had implemented the above recommendations is a judgmental approach to assessing the effect IT has on the auditor’s study and evaluation of internal controls and the nature and extent of substantive testing may no longer be adequate. Such an approach allows auditors too much leeway to decide whether to perform tests of controls or bypass such tests and only perform substantive tests. SAS 941 provides auditors with much-needed guidance regarding the effect of IT on internal controls.

The standard requires tests of controls in certain situations, regardless of the level of control risk2 set by the auditor. The evaluation of internal controls is not complete until the auditor obtains a sufficient understanding of the controls’ design and determines whether critical internal controls are present in the automated environment, in operation and working as intended. Public Company Accounting Oversight Board (PCAOB) Standard No. 23 upholds SAS 94 and discusses the IT control objectives to consider in assessing internal controls for US Securities and Exchange Commission registrants.

Source : http://www.isaca.org/Template.cfm?Section=Home&CONTENTID=34376&TEMPLATE=/ContentManagement/ContentDisplay.cfm

SMAK01-7

Auditing 2

1. What are three common pitfalls that should be avoided during brainstorming sessions? How can these problems be avoided?

Answer :

There are some common pitfalls that should be avoided during brainstorming sessions, such as Group domination, Social loafing, Groupthink and Groupshift.

• Group domination is one of the most corrosive problems. Because the goal of a brainstorming session is to have audit team members share thoughts and ideas, one or two participants dominating the process can quickly squelch the creative energies of the group as a whole, reducing the likelihood the team will identify any actual fraud risks.
• Social loafing, also called free-riding, is another potential pitfall of brainstorming activities. It occurs when participants disengage from the process, expecting that other team members will pick up the slack. Given their size and geographic dispersion, large audit teams may be particularly susceptible.
• Groupthink is another pitfall to avoid. This phenomenon occurs when team members become so concerned with reaching consensus that they fail to realistically evaluate all ideas or suggestions. Audit teams can be particularly susceptible to this as auditors generally are very sensitive to time/budget pressures.
• Groupshift is the fourth pitfall. While a purpose of brainstorming sessions is to help the audit team collectively arrive at conclusions about fraud risks, team leaders must exercise caution to avoid allowing the team to take an extreme position on fraud risk. With the recent emphasis on fraud detection, there is some cause for concern audit teams will assume the risks are high in all engagements.

These problems can be avoided by following the guidelines, such as :

• · Assign homework

The discussion leader should inform participants well in advance of a scheduled meeting that they will discuss fraud risks so each team member can focus on coming up with ideas about how and where the entity is susceptible. Distributing the meeting’s agenda will also provide greater context for participants to think about possible fraud risks and will further inform them about what to expect during the brainstorming session but a small firm not need to circulate an agenda before a brainstorming session because it has agreed upon a common agenda to be used across all engagements. The leader should encourage team members to use the experiences and knowledge obtained during previous audits and recent interactions with the client. Also, he or she should stress that the assignment should not be overly time-consuming; members can be formulating ideas as they perform their day-to-day tasks.

• · Establish ground rules

The leader should establish a strong foundation for brainstorming sessions by communicating fundamental ground rules before a session begins: Do not criticize others’ ideas, let each person speak, and try to build on others’ ideas. Audit team members should know what to expect of themselves and others. It is particularly important that all participants feel their input is valued and their voice will be heard. The leader also should make certain that participants understand how the session will proceed and how ideas generated during the meeting will impact the audit.

• · Set the tone

The leader should genuinely encourage all audit team members, including less experienced staff, to express any idea no matter how unusual it may seem. Because not everyone enters the brainstorming activity with a similar level of knowledge or experience with the client or willingness to share ideas about fraud risk in an open-ended fashion. Emphasizing that every idea is valued and everyone has something to contribute to the discussion. Demonstrated genuine involvement by the engagement leader will go a long way towards setting the stage for all team members to engage in the activity.

• · Take a “zero tolerance” stance on criticism

The leader must make it clear that no criticism about any issue presented will be allowed while the group is generating ideas about fraud risks. Any perception of criticism can quickly shut down a team member’s willingness to participate. Criticism also may negatively affect the efficiency of the brainstorming activity by diverting attention from the risk assessment process to other subjects. With a “zero tolerance for criticism” expectation, the team is less likely to fall prey to the pitfalls noted. Open-mindedness, not conformity, should be the meeting’s goal.

• · Encourage more not less

Participants should make every effort to generate as many ideas as possible about how and where the entity may be susceptible to fraud and how management might conceal its actions. The greater the number of ideas about potential fraud risks, the more likely the group will accurately identify and assess relevant fraud risks and develop appropriate audit responses to them. Reframing issues from different perspectives can be a valuable technique for increasing the number of ideas generated about a particular fraud risk.

• · Credit the group, not individuals

It is important for the leader to assign credit for ideas generated to the group as a whole rather than to a contributing member. Recognizing group ownership of ideas is more likely to increase the team’s interest and its commitment to its goals than when individuals are rewarded personally.

• · Manage group size and composition

Team leaders must not only include the ones who will be key to the discussion at hand, but also understand how group size might affect the outcomes. Thus, the number of people participating in sessions may vary across an engagement. The size of the group affects the structure of the session: Smaller groups (seven or fewer individuals) tend to complete tasks more quickly and reduce the potential for group domination or social loafing; larger groups (twelve or more individuals). For some very large engagements, the leader to divide the engagement team into subgroups, perhaps along the client’s business segments, for detailed brainstorming about fraud risks in those segments. Later, representatives from each subgroup can convene to discuss the risks identified at the segment level and to brainstorm about consolidated risks.

2. What are three important techniques to improve the effectiveness of a brainstorming session?

Answer :

There are three important techniques to improve the effectiveness of brainstorming session, such as Open brainstorming, Round-robin brainstorming, and Electronic brainstorming.

• · Open brainstorming

An unstructured technique auditors can use in which discussions follow very few rules and procedures. In this type of brainstorming, individuals share ideas as they come to mind in a kind of free-for-all. If audit teams decide to use this approach, it is best to have someone not participating in the brainstorming session record ideas. This might be a new staff person on the engagement who has little knowledge about the client’s business and environment and who will benefit by better understanding.

• · Round-robin brainstorming

A structured technique characterized by a session that begins with a period of no talking during which team members engage in silent “self-brainstorming,” or “brainwriting,” to form their ideas. The team, informed of the issues, assigned homework well in advance of the meeting and knowing they have to make a list of their ideas in priority order, will be more responsive to sharing with the group. After the brainwriting phase, each individual presents his or her ideas. One way to do this is to have members post their lists on a wall or bulletin board for all to see. This can be particularly useful if people are reluctant to speak up. And, it is efficient since all participants share in the process. Beside that Round-robin brainstorming also to eliminates the problem of group domination because each team member has a turn, participation is equal and otherwise quiet individuals have a chance to speak.

• · Electronic brainstorming

An increasingly popular technique that combines open brainstorming with software technology. Team members are told well before they gather, either in one room or from remote locations via an electronic link, to think about potential fraud risks. Electronic brainstorming begins when a participant or session leader presents an idea about a potential fraud risk to the group. In contrast to round-robin brainstorming, team members can share ideas as they come to mind. There is no need to wait for a turn to “speak” because the technology eliminates the problem of “talking over one another.” Specifically, participants silently share ideas by typing them into a computer, which quickly displays them on everyone’s monitor or a projection screen. Some technologies also provide participants with periodic feedback about the number and types of ideas to help reduce the likelihood of social loafing due to the anonymous and silent nature of this technique. Idea generation continues until the group has exhausted all of its ideas. Then the brainstorming software assists the team with the discussion and consolidation of its ideas. Electronic brainstorming generally shortens meeting times, increases idea generation and reduces the possibility of personalizing ideas because an idea’s author remains anonymous. Group size ceases to be a limiting factor as well. Current technology eliminates many coordination and communication problems, allowing reasonably large groups to have virtual meetings in which participants may or may not be in the same location as long as there is access to the appropriate software. So, this technique may be a tool for large, multinational client engagements where audit team members are globally dispersed.

Source :

http://www.journalofaccountancy.com/Issues/2003/Dec/APrimerForBrainstormingFraudRisks.htm

SMAK01-7

Auditing 2

1. Use EDGAR to search for Tri-Valley Corporation (TVC) and Monarch Staffing Inc. Find TVC’s 10-K and Monarch’s 10-KSB for the year ended 12-31-06.

Answer :

• Tri Valley Corporation ( 10-K )

Source : http://www.sec.gov/Archives/edgar/data/22551/000002255107000009/tvc123106-10k.htm

• Monarch Staffing Inc. ( 10-KSB )

Source : http://www.secinfo.com/d12PKm.u1p.htm#1stPage

2. Did either company report material weaknesses in ICFR? If so, what were the weaknesses?

Answer :

Yes, Tri valley Corporation report material weaknesses in ICFR, the weaknesses is reported as follow : related to controls over the accounting for complex transactions to Ensure such transactions are recorded as necessary to permit preparation of financial statements and Disclosures in accordance with generally accepted accounting principles. Such transactions included: TVC reported deficiencies “related to the control of the complex accounting for the transaction to ensure that transactions are recorded as necessary to permit preparation of financial statements and disclosure in accordance with accounting principles generally accepted.

The transaction includes:

• Proved and unproved properties
• Loans guaranteed with restricted common stock, loans secured by restricted common stock
• Deferred income taxes, deferred income taxes
• Discontinued operations from the sale of our interest in Tri-Western Resources, and Stop operation from the sale of our interest in Tri-West
• Share-based payment arrangements, “Share-based payment arrangements”

Yes, Monarch Staffing Inc. report material weaknesses in ICFR, the weaknesses is reported as follows : We did not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience, and training in the application of U.S. generally accepted accounting principles commensurate with our existing financial reporting requirements and the requirements we face as a public company. Accordingly, management has concluded that this control deficiency constitutes a material weakness, and that it contributed to the following material weakness. Therefore, management has concluded that this control deficiency is a material weakness, and that contributed to the following material weaknesses.

Beside that report of independent auditor also reported as follows : Our auditors have expressed an opinion that there is substantial doubt  about our ability to continue as a going concern primarily because we have  yet to generate sufficient working capital to support our operations and  our ability to pay outstanding employment taxes. Our most recent financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments that might result from our inability to continue as a going concern. If we are unable to continue as a going concern, investors will lose their entire investment in our Common Stock.

Source : http://www.sec.gov/Archives/edgar/data/22551/000002255107000009/tvc123106-10k.htm and http://www.secinfo.com/d12PKm.u1p.htm#1stPage

SMAK01-7

Auditing 2

1. Imagine that you are employed as an auditor in a CPA firm that performs the audit of Microsoft. Your firm’s materiality guidelines indicate that overall engagement materiality should be set at an amount between five and ten percent of income before taxes.

a.  Apply your firm’s guidelines to Microsoft’s 2003 financial statements. What percentage of income before taxes do you believe is appropriate? Why? What do you believe overall engagement materiality should have been for 2003?

b.  Given Microsoft’s 2003 balance sheet, what asset line items would be allocated the highest amount of tolerable misstatement? Why?

Answer :

1. a.

• Percentage of income before taxes is 5% to 10% because Financial reporting reasonable is if not exceed misstatement materiality level.
• Overall engagement materiality should have been for 2003 is Determine the initial consideration of the materiality, Allocate   initial consideration of materiality to the segment, Estimated total errors in the segment, Estimate the combined error and Compare estimates with the combined initial consideration of the materiality.

1. b Balance Sheets

Asset line items allocated the highest amount of tolerable misstatement is account receivable because in cash flow statement account receivables show increase amount in every year

Source : https://investor.shareholder.com/msft/EdgarDetail.asp?CIK=789019&FID=1193125-03-45632&SID=03-00

SMAK01-7

Auditing 2

1. Internet Problem 8-1 (Industry Research and Client Acceptance)

The vignette at the beginning of Chapter 6 in the text contains a brief description of the ZZZZ Best fraud. One area where the auditors were particularly criticized in that audit had to do with the auditors’ lack of industry knowledge. With hindsight it appeared that the fraud should have been easily detected because ZZZZ Bests’ large restoration contracts were in excess of $7 million while the largest restoration jobs on record in the insurance restoration industry were less than $3 million.

You have been approached by On the Sunny Side, a team sports uniform designer and manufacturer for women, about performing the company’s financial statement audit. The company began operations eight years ago and has experienced strong growth in the last several years. Teri Kloth, the chief executive officer, has told you that her company expects production in 2004 to be 450,000 units. She also provided summary historical financial and operating data regarding unit sales. In   2002 and 2003, the company reported sales of 365,000 and 402,000 units,respectively.

Are On the Sunny Side’s 2002 and 2003 unit sales reasonable? Why or why not? (Hint: Visit the U.S. Census Bureau’s web site. Once you are at the site, go to the “Business” section and then to the “Manufacturing” sector-specific data section. Once you are there, locate the Current Industrial Reports. Next search the CIRs by Subject Title for Apparel. Data about women’s team sports uniforms can be found by search for “Apparel.” Use the most current annual report for your analysis.

Answer :

My analysis about the Sunny Side’s 2002 and 2003 unit sales is reasonable because according the result from most current annual report show significant increase in every year.

Source : http://www.census.gov/manufacturing/cir/historical_data/mq315a/index.html

2. Internet Problem 8-2 (Obtain Client Background Information)

Planning is one of the most demanding and important aspects of an audit. A carefully planned audit increases auditor efficiency and provides greater assurance that the audit team addresses the critical issues. Auditors frequently prepare audit planning documents that provide client and industry background information and discuss important accounting and auditing issues related to the client’s financial statements.

Your assignment is to find and document information for inclusion in the audit planning memorandum. You should obtain the necessary information by downloading a public company’s most recent annual report from its web site (your instructor will give you the company’s name). You may also use other sources of information such as recent 10-K filings to find additional information. You should address the following matters in four brief bulleted responses:

• Brief company history.
• Description of the company’s business (for example, related companies and competitors).
• Key accounting issues identified from a review of the company’s most recent annual report. (Note: Do not concentrate solely on the company’s basic financial statements. Careful attention should be given to Management’s Discussion and Analysis as well as the Footnotes.)
• Necessary experience levels (that is, years of experience and industry experience) required of the auditors to be involved in the audit.

Answer :

XEROX CORPORATION FORM 10-K (December 31, 2008)

• Brief Company History.

In 1906, the Xerox Company was founded in Rochester, New York. First known as The Haloid Company, it specialized in manufacturing photographic equipment and paper. It became “Haloid Xerox” in 1958 and then “Xerox” in 1961. Its name is so ubiquitous that to “Xerox” something has become a verb and part of American vernacular instead of just a company name. And in fact, its claim to fame is as the manufacturer of the first plain paper photocopier, introduced in 1959. By 1961, Xerox had made almost $60 million in revenue, and by 1965, revenues jumped to over $500 million. Its burgeoning profits were very welcome news for the investors who had believed in and helped finance the research and development of the product in question, which finally made them wealthy. In fact, some of them became millionaires.

Xerox introduced desktop copying in 1963, laser printing in 1969, and color copying in 1973. However, its product line didn’t just stop there. In 1970, it opened a new research facility in Palo Alto, California and developed such innovative products and techniques as the graphical user interface and the mouse. However, its developments remained focused on its basis for household recognition, Xeroxing — that is to say, photocopying.

As of 2000, Xerox completed its turnaround and is once again a solidly established company with a leading edge in the marketplace. Xerox continues its dominance in the photocopy and document-managing sector of the industry with its current line of printers. Currently, the major players in the photocopying and printing sector include printers that function in multiple ways, Xerox Phaser printers, photocopiers, and new workflow software under a new strategy called “FreeFlow.” FreeFlow in particular has brought Xerox into the graphic arts market and the print industry. The company has also begun to sell selling digital scanners and printers. It also continues to sell professional printers, black and white copiers and fax machines, among other products. Xerox has also recently branched into selling office supplies.

In conclusion, Xerox is a company that’s been around for more than a century. It revolutionized business with its ability to inexpensively and quickly make copies, and has since gone on to become so ubiquitous that its name has become part of the vernacular. It remains top-of-the-line in the 21st century as it adjusts its product line to meet the changing needs of consumers and businesses alike.

Source : http://www.articlesbase.com/business-articles/brief-history-of-the-xerox-company-664924.html

• Description of the company’s business (for example, related companies and competitors)

We are a $17.6 billion technology and services enterprise and a leader in the global document market. We develop, manufacture, market, service and finance a complete range of document equipment, software, solutions and services.

We provide the document industry’s broadest portfolio of document systems and services for businesses of any size. Digital systems include high-end printing and publishing systems; digital presses, advanced and basic multifunctional devices (“MFD’s”) which can print, copy, scan and fax; digital copiers; laser and solid ink printers and fax machines.

Beside that we provide software and workflow solutions with which businesses can easily and affordably print books, create personalized documents for their customers, and scan and route digital information. Our services expertise is unmatched and includes helping businesses develop online document archives, analyzing how employees can most efficiently share documents and knowledge in the office, operating in-house print shops or mailrooms, and building Web-based processes for personalizing direct mail, invoices, brochures and more. We also offer software, support and supplies, such as toner, paper and ink.

And also we provide high-end digital monochrome and color systems designed for customers in the graphic communications industry and for large enterprises. These high-end devices enable digital on-demand printing, digital full-color printing and enterprise printing. We are the only manufacturer in the market that offers a complete family of cut sheet monochrome production systems from 65 to 288 pages per minute (“ppm”), color production systems from 40 to 110 ppm and a complete line of continuous feed printers from 250 to 1,064 ppm. In addition, we offer a variety of pre-press and post-press options and the industry’s broadest set of workflow software.

With our Freeflow ® digital workflow collection of software technology solutions, our customers can improve all aspects of their processes, from content creation and management to production and fulfillment. Our digital technology, combined with total document solutions and services that enable personalization and printing on demand, delivers value that improves our customers’ business results.

• Key accounting issues identified from a review of the company’s most recent annual report. (Note: Do not concentrate solely on the company’s basic financial statements. Careful attention should be given to Management’s Discussion and Analysis as well as the Footnotes.)

Our management is responsible for the integrity and objectivity of all information presented in this annual report. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and include amounts based on management’s best estimates and judgments. Management believes the consolidated financial statements fairly reflect the form and substance of transactions and that the financial statements fairly represent the Company’s financial position and results of operations.

The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly with the independent auditors, PricewaterhouseCoopers LLP, the internal auditors and representatives of management to review accounting, financial reporting, internal control and audit matters, as well as the nature and extent of the audit effort. The Audit Committee is responsible for the engagement of the independent auditors. The independent auditors and internal auditors have access to the Audit Committee.

We have established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors. Based on their evaluation as of December 31, 2008, our principal executive officer.

Based on the above evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2008.

Source : http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136-000119312509029257-4SM116DABMMAKBIBVR62DJDURA&docFormat=HTM&formType=10-K

• Necessary experience levels (that is, years of experience and industry experience) required of the auditors to be involved in the audit

1. He or she meets all the bright-line independence and other applicable requirements under the listing standards of the New York Stock Exchange (NYSE) and all other applicable laws, rules and regulations regarding director independence, in each case from time to time in effect;

2. He or she is not a current employee (and none of his or her “immediate family members”, as defined by the NYSE Corporate Governance Rules, is employed as an “executive officer”, as defined by the NYSE Corporate Governance Rules) of a company that has made payments to, or received payments from, the Company or any of its consolidated subsidiaries for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or one percent of such other company’s consolidated gross revenues; and

3. In the event that he or she serves as an executive officer or director of a charitable organization, the Company and its consolidated subsidiaries donated less than five percent of that organization’s charitable receipts (provided that if within the preceding three years the Company and its consolidated subsidiaries donated annual aggregate contributions in excess of $1 million or 2% of the annual consolidated gross revenue of the charitable organization, such contributions must be disclosed in the Company’s proxy statement).

The Board requires that a substantial majority of the Board should consist of independent Directors. Any management representation should be limited to top Xerox management. Nominees for Director are selected on the basis of, among other things, broad perspective, integrity, independence of judgment, experience, expertise, diversity, ability to make independent analytical inquiries, understanding of the Company’s business environment and willingness to devote adequate time and effort to Board responsibilities. Members should represent a predominance of business backgrounds and bring a variety of experiences and perspectives to the Board.

Source : http://www.xerox.com/about-xerox/citizenship/corporate-     governance/guidelines/enus.html

SMAK01-7

Auditing 2

1. Read about ACL’s solution for data quality and fraud detection. How might an auditor use ACL’s data analytics software for these two purposes?

Answer :

ACL technology helps detect and prevent fraud by allowing organizations to:

• Test 100 percent of transactions
• Quickly access data from any source
• Flag all suspicious activity
• Automate testing to free up resources for more strategic investigations
• Summarize fraud risks for management review

Source : http://www.acl.com/solutions/fraud_detection.aspx

2. How might ACL be used by a company to comply with the requirements related to internal control over financial reporting? Hint: Take a look at ACL’s Continuous Controls Monitoring software.

Answer :

By providing perpetual assessment of key controls and insight into transactions, continuous monitoring can help organizations quickly identify issues that significantly impact the bottom line.

ACL’s new business assurance platform offers the ability to close the loop on audit findings.  AX Exception enables exceptions found by audit to be passed seamlessly to the business stakeholders responsible for determining the cause, and correcting the control exceptions. ACL consultants help configure the product to monitor an organization’s entire remediation process, and escalate exceptions when appropriate.

ACL AuditExchange 2 allows organizations to Detect and prevent fraud, waste and errors, Identify segregation of duties issues, Gain prompt notification of control breaches And Drill down to exceptions for quick resolution.

Source : http://www.acl.com/solutions/continuous_monitoring.aspx