Audit Case Payment Accomodating

Question: Describe about the Audit Case for Payment Accomodating. Answer: A: The main risks that have been identified Overlook Video Stores Inc, are depicted as follows. Problems in accommodating the refusal of payment, which generates from no late fees payment scheme Problems in detecting individuals, who are yet to return the DVD to an OVS store. Transferring inventory-DVD for rent to inventory previously viewed DVDs for sales Problems in website and printing wrong shipping report The identified risk might mainly reduce the efficiency to the company and in turn hamper the overall profitability, which might be generated from online rental and sales. Bondar (2016) stated that identified risk mainly helps companies to reduce the negative impact on its operations and maintain the level of productivity, which might improve its overall profitability. B: Overlook Video Stores Inc for addressing the risk assessment identified for the company could use risk assessment interim and financial audit approach. This interim audit process could be used for identifying the operational disparity in the company. The financial audit approach could also be used in addressing the monetary risk of the company. C: Materiality of Overlook Video Stores Inc needs to be evaluated, which might help in depicting the adequate financial position of the company. In addition, the materiality engagement mainly allows the auditor to prepare material aspect, which could provide viable audit report. D: The main account specific risk as discussed below. Non-payments of DVD rental and price is mainly depicted as the specific account risk, which might hinder profitability of the company. Risk from three-year subscription plan The overall identified risk might mainly hamper the overall misstatement of the company, which in turn might hamper the audit report. William, Glover Prawitt (2016) stated that account specific risk mainly decreases the efficiency of the financial report of the company. E: Figure 1: Depicting the test procedure for identified risk (Source: ) With the help of figure 1, the overall procedure for testing the risk could be effectively conducted. In addition, the VOOP acronym procedure mainly allows auditors to conduct test, which might portray intensity of the identified risks. Budescu, Peecher, Solomon (2012) stated that defined test allows auditors to evaluate the maximum misstating, which might be conducted by companys accountants. F: The website developed by Moonwatcher Web Designers has certain flaws, which has been tampering with the operations of OVS. The new IT system used by the company has the following weakness. Increase number of server crashes, which are not controlled by MWD Wrong addresses printing conducted by the software Continuous augmentation of bug, which decreases efficiency of the online platform The above-depicted weaknesses mainly hamper the operational capability of OVS, which in turn affect its profitability. Furthermore, MWD was mainly paid 8.5 million for the development of website, which always needs tweaking and readjustments. Griffin (2014) mentioned that problems in online presence mainly reduce ability of the company to continue its flow of operational and attract potential customers. Reference: Bondar, Y. (2016). Materiality of Established Errors in the Audit of Agricultural Business and Its Relationship with Documenting of Audit Procedures.Accounting and Finance, (1), 146-153. Budescu, D. V., Peecher, M. E., Solomon, I. (2012). The joint influence of the extent and nature of audit evidence, materiality thresholds, and misstatement type on achieved audit risk.Auditing: A Journal of Practice Theory,31(2), 19-41. Griffin, J. B. (2014). The effects of uncertainty and disclosure on auditors' fair value materiality decisions.Journal of Accounting Research,52(5), 1165-1193. William Jr, M., Glover, S., Prawitt, D. (2016). Auditing and Assurance Services: A Systematic Approach.Auditing and Assurance Services: A Systematic Approach.