CHAPTER.

13
OVERVIEW OF A GROUP
OF AUDIT
DANIELA MICHELLE GARZA GARCÍA 180142 5
A N TO N I O A L E J A N D R O RO D R Í G U E Z A N C E R 1 7 3 8 3 1 5
J O E L A L B E RTO O RT I Z RO D R Í G U E Z 1 8 0 2 5 4 0
CARLOS MONTIEL GARCÍA 1794184
S A R A H L U C I A M A RT I N E Z M O R A 1 8 3 4 6 8 2
CONTENTS OF GROUP AUDIT
INSTRUCTIONS
 SECTIONS A AND SECTION B OF THE GROUP OF AUDIT
INSTRUCTIONS
• The first 2 sections contain general information and specific procedures, the general info is about
subsidiaries and audit standards required. Specific procedures include discussion on:
– Reporting package and deadline
– Separate report information
– Currency exchange considerations
– Supplemental statements
– Details about the completion memorandum
– Potential material weakness in internal control
– Management letter comments
– Material differences
– Specific details of the client audited
 SECTION C OF THE GROUP AUDIT INSTRUCTIONS -HOME
OFFICE TECHNOLOGY (HOT)- THE COMPANY

• Questions about Local (HOT

subsidiary)
– Is there an in-house legal
department?
– Is there and in-charge manager?
– Who is Local’s general counsel?
 SECTION D OF THE GROUP AUDIT INSTRUCTIONS - AUDIT
SCOPE, FEES AND COVERAGE

• The section begins with a list of

names and telephone numbers of
key personnel responsible for the
HOT audit: the partner, manager
and in charge senior manager.
Also includes a list of key
personnel names and telephone
numbers, partner and manager at
BIG’s US office.
• The general audit plan gives you a list of the audit area and a description of audit
procedures, which you can perform prior to year-end.

• The audit timetable calls for all working papers, reports and supporting schedules to be
received by January 30, at BIG overseas. The audit-planning memorandum will be due
December 12.
SECTION E OF THE GROUP AUDIT INSTRUCTIONS-
CRITICAL AND SIGNIFICANT AUDIT CONCERNS
• This section shows which items you will need to concentrate on during the audit. The specific
areas of concern are revenue, research and development costs, third-party regulation,
acquisitions, restructure accruals, management letters, benchmarking and new accounting
standards.
• There are 4 conditions:
1. A signed purchase order is received.
2. Credit worthiness of the customer is reviewed and the sale is documented.
3. The product has been shipped.
4. The product shipped is only the currently authorized product, not test products or samples.
 SECTION F (MANAGEMENT LETTERS) AND G (NEW
ACCOUNTING STANDARDS) OF THE GROUP AUDIT
INSTRUCTIONS.
• Management letters are important to BIG. The instructions convey the suggestions for the
management letter to be reviewed with Local managers. Also make sure that your comments are
supported in the working papers and typed for inclusion in the consolidated management letter.

SECTION H (INDEPENDENCE) OF THE GROUP AUDIT

INSTRUCTIONS.
• You and your audit team need to have sufficient understanding of, and have complied with, the
applicable independence requirements.
• You will write e-mails to your audit team in orders to determine and document their compliance with
rules.
THE AUDIT PLANNING MEMORANDUM

Audit
planning
memorandum

Strategy Part PlanPart

I- Introduction

II-Follow up Section

III-Insights Section

IV- Initial Risk Analysis

V-Internal Control and Control Procedures

VI- Identification of critical audit objectives

VII- Client service aspects item

VIII- Important Contacts

IX- Service Audit team

THE AUDIT PLANNING
MEMORANDUM-PLAN PART
• The strategy part of the audit planning memorandum sets the broad direction for the audit.
• The plan part of the audit planning memorandum summarizes technical matters, client service
matters and logistical matters.
• Revenue Recognition Procedures Key
 The group audit instructions from BIG Overseas stated that revenue recognition would be a key
area.
 You plan to review revenue recognition policy by first testing cut-off procedures; then make a
review of shipping documents as an altemative procedure to confirmation of accounts
receivable, and boundary testing on the revenue cycle.
• Fees, Timetable and Client Contacts
 Fees and the timetable for the audit are important parts of the audit plan for obvious reasons.
You calculate the budgeted hours and related fees for partner, manager, staff, and out-of-pocket
expenses. The timetable for audit was given to you in the instructions as follows
(1) planning memo, time and fee estimate are due December 12, 20xX: (2) format financial
statement and items requested by group audit instructions are due on January 23, 20XX and
(3) a draft of management letter is due on January 30, 20XX.
AUDIT PROGRAM (AUDIT PLAN)