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 Auditor
AUDIT PROCEDURES WP Ref Initials

Audit Objectives

The purpose of this work program is to evaluate the operating effectiveness

of internal controls identified in the External Financial Reporting process and
related sub-processes. Listed below are sample risks and controls identified
for Company ABC to test for the External Financial Reporting process and
related sub-processes. This work program may not be applicable to all
businesses without modification.

I. Sub-Process - Earnings Release

A. /Risks

1. Risk – Consolidated financial statements and schedules included in the

earnings release may be misstated due to inaccurate input by Corporate
Accounting.
2. Risk – Earnings release text, the consolidated financial statements and
schedules may not be in compliance with SEC regulations.
3. Risk – Consolidated earnings release text may be inaccurate.

B. Controls

1. Pervasive - Individuals responsible for preparing the earnings release

schedules and text have the appropriate skills and knowledge in order to
perform their duties correctly.
2. Specific - Earnings release schedules are reviewed by the VP-Finance
and VP-Accounting.
3. Specific - Earnings release schedules are prepared in a standard format
each quarter in an excel spreadsheet.
4. Specific - Earnings release schedules and text are tested for clerical
accuracy by the Director of Corporate Accounting and the Manager of
Financial Reporting.
5. Specific - Manager of Financial Reporting and Director of Accounting
agree numbers in the earnings release schedules to the amounts in the
external reporting schedules.

II. Sub-Process - Form 10-Q

A. Risks
1. Risk – Consolidated financial statements may be misstated due to
inaccurate/incomplete information provided to personnel responsible for
financial reporting from business units or other corporate departments.
2. Risk – Consolidated financial statements may be misstated due to
inaccurate/incomplete input of information into Form 10Q MD&A.
3. Risk – Consolidated financial statements may be misstated due to
inaccurate/incomplete input of information into Form 10Q financial
statements and footnotes.

4. Risk – Consolidated financial statements may be misstated due to the

financial statements footnotes not being in compliance with GAAP.
5. Risk – Form 10Q may not be in compliance with SEC regulations for form
and content.

B. Controls

1. Pervasive - Individuals responsible for the preparation of Form 10Q have

the appropriate skills and knowledge in order to perform their duties
correctly.

2. Specific - Information input into Form 10Q is compared to previously filed

Form 10Q's.

3. Specific - Manager of Financial Reporting agrees amounts in Form 10Q

to the earnings release schedules, consolidating schedules, and other
supporting documentation.

4. Specific - Manager of Financial Reporting completes a disclosure

checklist from an external accounting research provider, which is reviewed
by Director of Financial Reporting.

5. Specific – Director/Manager of Financial Reporting creates a disclosure

items spreadsheet, based on review of Board of Director Minutes,
completion of financial reporting checklist, company press releases, and
discussions with legal, finance and accounting management.

6. Specific - Information input into the Form 10Q is checked for clerical
accuracy and internal consistency by the Manager of Financial Reporting
and the Director of Corporate Accounting.

7. Specific - Form 10Q is reviewed by Director of Corporate Accounting and

VP-Accounting.

8. Specific - Form 10Q is reviewed by the Management Committee, Audit

Committee Chairman, Executive Officers of the Company, and Business
Unit senior management.

9. Specific - Schedules used to complete MD&A disclosures are provided in

a standard format.
10. Specific - Schedules used to complete footnote disclosures are saved
on the network and used each quarter for applicable footnote disclosure and
are in a standard format.

III. Sub-Process - Form 10-K

A. Risks

1. Risk – Consolidated financial statements may be misstated due to

inaccurate/incomplete information provided to personnel responsible
for financial reporting from business units or other corporate
departments.
2. Risk – Consolidated financial statements may be misstated due to
inaccurate/incomplete input of information into Form 10K MD&A.
3. Risk – Consolidated financial statements may be misstated due to
inaccurate/incomplete input of information into Form 10K financial
statements and footnotes.

4. Risk – Consolidated financial statements may be misstated due to the

footnotes to the financial statements not being in compliance with GAAP.
5. Risk – Form 10K may not be in compliance with SEC regulations for form
and content.

B. Controls

1. Pervasive - Individuals responsible for the preparation of Form 10K have

the appropriate skills and knowledge in order to perform their duties
correctly.
2. Specific - Information input into Form 10K is compared to previously filed
Form 10K's.
3. Specific - Manager of Financial Reporting agrees amounts in Form 10K to
the earnings release schedules, consolidating schedules, and other
supporting documentation.
4. Specific - Manager of Financial Reporting completes a disclosure
checklist from an external accounting research provider, which is reviewed
by the Director of Financial Reporting.

5. Specific – Director/Manager of Financial Reporting creates a disclosure

items spreadsheet based on review of Board of Directors minutes,
completion of financial reporting checklist, company press releases, and
discussions with legal, finance, and accounting management.
6. Specific - Information input into the Form 10K is checked for clerical
accuracy and internal consistency by the Manager of Financial Reporting
and Director of Corporate Accounting.
7. Specific - Form 10K is reviewed by Director of Corporate Accounting and
VP-Accounting.
8. Specific - Form 10K is reviewed by the Management Committee, Audit
Committee Chairman, Executive Officers of the Company, and Business
Unit senior management.
9. Specific - Schedules used to complete MD&A disclosures are provided in
a standard format.
10. Specific - Schedules used to complete footnote disclosures are saved
on the network and used each quarter for applicable footnote disclosure and
are in a standard format.

IV. Sub-Process - Debt Compliance

A. Risks

1. Assertion – Accuracy
Risk – Footnotes to consolidated financial statements may be misstated due
to inaccurate calculations of financial ratio covenants.
2. Assertion – Existence/Completeness
Risk – Company may not be in compliance with debt covenants due to
reporting requirements that are not provided to the bank on time.

B. Controls

1. Pervasive - Individuals responsible for the debt compliance process have

the appropriate skills and knowledge in order to perform their duties
correctly.
2. Specific - The spreadsheets used to calculate debt covenants are
completed in a standard format.
3. Specific - The supporting schedules used to complete debt covenant
calculations are provided in a standard format.
4. Specific – The Manager of Financial Reporting agrees amounts input into
debt covenant calculations to supporting financial statements and other
supporting financial information.
5. Specific - Debt covenant calculations are reviewed by the Director of
Financial Reporting and VP-Finance.

Project Work Step

I. Project Administration – Open
1. Obtain and review the risk and control documentation created during the
Sarbanes–Oxley Section 404 project to gain an understanding of the
processes.
2. Obtain and review prior internal audit reports, external auditor
management letters, and any design issues identified during the Sarbanes–
Oxley Section 404 project.
3. Request documents needed for fieldwork. Obtain Copy of Form 10Q, 10K
or earnings release from CompanyABC.com, investor relations. Other
support needed for fieldwork should be made readily available during
fieldwork.
II. Earnings Release (See Section I. Sub-Process – Earnings Release
above)
1. Document qualifications of VP-Accounting, VP- Finance, Director of
Corporate Accounting, and Director and Manager of Financial Reporting.
2. Obtain earnings release work papers from Manager of Financial
Reporting:
a. Review tie-out for completeness.

b. Agree balance sheet, income statement and supplemental schedules

included in earnings release to supporting external reporting schedules.
c. Ensure earnings release schedules are completed in a standard format
each quarter.
3. Obtain earnings release checklist/timeline from Manager of Financial
Reporting and ensure earnings release has been distributed and reviewed
by applicable accounting and finance management personnel.
III. Form 10-Q (See Section II. Sub-Process – Form 10-Q above)
1. Obtain 10Q work papers for one quarter during the test period.
a. Review tie-out of 10Q to ensure completeness.
b. Agree financial statements to earnings release.
c. Agree cash flow statement to supporting work papers.
d. Ensure MD&A was tied-out completely.
e. Judgmentally select X footnotes and re-compute/re-perform tie-out and
ensure supporting schedules are completed in a standard format. See
below for additional specific steps on stock options footnote.
f. Ensure Director/Manager of Financial Reporting checklist has been
completed and signed-off.
g. Ensure external quarterly disclosure checklist has been completed.
h. Ensure internal quarterly disclosure consideration checklist has been
completed.
i. Ensure accounting issues list has been updated for the quarter.

j. Review summary of minutes completed by Manager of Financial Reporting

and ensure issues identified in memo have been considered and resolved.
2. Obtain binder of CEO and CFO “302” certifications. Ensure signatures
have been obtained and ensure sub-certifications have been received from
senior management.

3. Obtain support for Stock Options Footnote and complete the following:
a. Agree numbers in footnote to supporting schedule.
b. Review supporting work papers to ensure lead schedule agrees to
administrator reports.
c. Ensure work papers include tests to ensure accuracy of administrator
reports.
IV. Form 10-K (See Section III. Sub-Process – Form 10-K above)
1. Review tie-out of 10K to ensure completeness.
a. Agree financial statements to earnings release.
b. Agree cash flow statement to supporting work papers.
c. Re-compute/re-perform tie-out of MD&A.
d. Review support for contractual obligation disclosures made in MD&A and
agree amounts in disclosure to supporting documentation.
e. Judgmentally select footnotes and re-compute/re-perform tie-out and
ensure supporting schedules are completed in a standard format. See
below for additional specific steps on stock option and tax footnote.
f. Ensure Director/Manager of Financial Reporting checklist has been
completed and signed-off.
g. Ensure external annual disclosure checklist has been completed.
h. Ensure internal annual disclosure consideration checklist has been
completed.
i. Ensure accounting issues list has been updated for the quarter.
2. Review summary of minutes completed by Manager of Financial
Reporting and ensure issues identified in memo have been considered and
resolved.
3. Obtain binder of CEO and CFO “302” certifications. Ensure signatures
have been obtained and ensure sub-certifications have been received from
senior management.

4. Obtain support for Stock Options Footnote and complete the following:
a. Agree numbers in footnote to supporting schedule.
i. Review supporting work papers to ensure lead schedule agrees to
administrator reports.
ii. Ensure work papers include tests to ensure accuracy of administrator
reports.
5. Obtain support for Tax Footnote and complete the following:
a. Agree numbers in footnote to supporting schedule and check for internal
consistency with the financial statements.
b. Ensure deferred tax assets and liabilities are properly presented in
footnote per company accounting policies.
6. Review disclosure checklist section that relates to income tax disclosures
and ensure all necessary disclosures have been made.

V. Debt Compliance (See Section IV. Sub-Process IV – Debt Compliance

above)
1. For one quarter:

a. Review tie-out of debt compliance calculation to supporting work papers.

b. Ensure debt compliance checklist has been completed and signed-off.

c. Agree a sample of amounts in the calculation to financial statements and

supporting work papers and ensure completed in a standard format.
VI. Project Administration – Closing
1. Review the audit program to ensure that all program steps have been
completed, documented and signed-off.
2. Identify exceptions and document compensating controls. Discuss the
compensating controls with the Section 404 Project Team and determine if
controls should be tested. If controls are tested, document the testing
performed and test results.
3. Document all findings and results of tests in audit software.
4. Document any issues and remediation plans in an issue resolution
document and discuss with the appropriate individuals.
5. Communicate all issues to the Section 404 Project Team.
6. Determine overall operating effectiveness of controls.
Time Date Date Checked
Spent Expected Finished Remarks By:
Audit Program Area:

CYCLE PROCESS AREA

CONTROL
RECOMMENDATION
COMPENSATING CONTROL
 Auditor Time
WP Ref Initials Spent
 Date Date Checked
Expected Finished Remarks By:
 Client Name
Internal Control Framework

Date Completed:
Completed By:
Reviewed By:

Question Yes No* Comments /Description

To the best of my knowledge, the answers and comments noted above are accu
internal controls within this department:

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
 Name and Title of Person Completing Form (please print) Name and Title of Department Dir

Signature of Person Completing Form Signature of Departmen

1/13/2021
Date Form Completed Date of Department Directo

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
 Employee Responsible for Task

s noted above are accurate and reflect the current

this department:

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
Name and Title of Department Director (please print)

Signature of Department Director

Date of Department Director's Signature

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
Finding Ref # Control Testing Finding
Management Response & Treatment