ACTIVITY 4

INGRID ALEJANDRA CORONADO ID 264079

NURY KARINA LEAL SÁNCHEZ ID 721740

KAREN NICOLD SERRANO ID 721977

LEIDY VIVIANA ABELLO ID: 75831

TUTOR

LIDA ASTRID MEJIA GONZALEZ

CHAIR

AUDIT AND ASSURANCE I

NRC 7912

UNIVERSITY CORPORATION MINUTE OF GOD

FACULTY OF ADMINISTRATIVE SCIENCES

PUBLIC ACCOUNTING

BOGOTA 2021
 PUBLIC ACCOUNTING

Auditing and assurance

Activity 4

AUDIT RISK ASSESSMENT

Colanta is a company positioned in the national market and recognized in Colombia for the
sale of dairy products and their derivatives with high quality standards, for many years
for years seeks to satisfy the nutritional needs of Colombian households, it is a company
which is in constant growth, which implies a greater challenge when it comes to doing
control and detect errors that may be harmful to the company.

The auditor must be aware of all aspects of the company and approach it from all angles.
the company not only the financial aspect but also to take into account its inventory aspects,
sales, staff, production processes and others that are involved in economic activities
of the company.

The auditor, upon gaining knowledge of the company and assessing the business risk, must evaluate the
probability of significant errors in the client's financial information through analysis
of the different cycles

Since the auditor's objective is to identify and assess the risks of material misstatement, due to
the fraud or error, both in the financial statements and in the assertions, through the
knowledge of the entity and its environment, including its internal control, with the purpose of
to provide a foundation for the design and implementation of responses to assessed risks of
material misstatement. This is why auditors use the AUDIT RISK model,
to identify the potential for errors and where there is a higher probability of occurrence.

In addition, the auditor will apply risk assessment procedures in order to have
a basis for identifying and valuing the risks of material misstatement in the financial statements and
in the statements.

Below is an illustration of a hypothetical company, as a framework for

reference for this study.

Sales cycle and Payroll cycle Cycle of

collections/level of my personal/level inventories and
Cycle or process risk of risk warehouse/level of
risk
A Risk Most of The rotation of When working with
inherent is that which exists without our clients are personnel, dairy which
import the activities new chain stores personnel refers to a subject
economic aspects of the company, that have the requires more first perish and
we can mention some liquidity to comply expenses in at the same time as
inherent risks such as damages with the obligations training requires a
in the physical facilities or acquired with staffing and I manage very
machinery, fraud, theft by we, despite others, due to strict given that
of the employees, non-payment of that too the exposure to your risk of suffering
 obligations on the part of the we have temperatures in the damage is so high,
clients, among others. small clients the plant of bad manipulation
as shopkeepers of processing is reflected in
neighborhood, these sales the rotation of losses for the
are made at personal company, therefore
counted, for which constant by this refers to a
the risk in this reason this high risk for the
collections and sales risk in our company
in our company company
it is a low risk. it meant a
risk of
classification
media.

B Control risk: The intdades The biggest The company The company
they must establish activities of concentration of the gives to him it has a
controls that allow them wallet is located personal product line
prevent, detect and correct the in the associates training and dairy which
producers and training that they have matter
deviations that occur
workers from allows them to have first to perish;
in their procedures.
COLANTA, the wallet qualified personnel this means that
Said control activities is located with skills, must have a
they must aim to mitigate the covered with several skills and quality control
main risks to which one is types of guarantees competencies in a way
expose the entity. being the largest that improve the efficient for each
participation the performance and production.
mortgages and the development of the The company
contributions of the functions of counts on a
associates of each position qualified personnel
COLANTA. generating and teams
satisfaction and technological for
growth in the development of
Cooperative, to the a good product.
misplaced time
to be at the
vanguard of the
different
trends
administrative
financial and
tax
C It involves the decisions important The Cycle of
y processes that the inventory auditor y
necessary to verify if the warehouse is unique
Audit risk transfer of the entity due to its a
property of goods procedures close relationship
The risk in the audit means the and services a the suitable ones for other cycles of
risk that the auditor of a client after each of the operations.
inappropriate audit opinion that is applied to processes that the raw material and
when the financial information, willingness to find labor
administrative, operational or sales. It begins with related to direct enters into the
The management is prepared in the form of a request for the management and the inventory cycle.
erroneous of a way part liquidation of the and storage
important. of a client and payroll; these apart from the cycle of
The risk in the audit concludes with the acquisition and payment that must be.
components: conversion from one o various and of the cycle of
Inherent risk, material or service in documents, payroll and personnel,
2. Control risk and an account among these must respectively. The
3. Detection risk. to be billed and for the inventory cycle manual
last in effect. of the functions, and storage
The cycle includes several the manual ends with the
process classes, the sale of the
operations, accounts diagrams of products in the
y functions flows, sales cycle and
administrative, thus organizational charts, collection. The
how various among other audits of
documents and inventory documents, in
[Link] facilitate the special the
next their process of balance tests
accounts common liquidation of the inventory at the end
which are included in the payroll of the year, is the part
sales cycle and best way. more complex and the
collection For example: what consumes more
Sales. Types detempo in the
Sales y contracts. audit.
returns Review of the factors that
about sales. the payments. they affect the
Debt expenses Calculations and complexity of the
bad debts. records audit of
Discounts in according to the DUT inventory includes
tornado effects. and the ET. the
Accounts by ● Inventory review is a
charge with expense supports. important part
to clients. Review in the balance
Estimation for general books, often
accounts countable and it is the most part
uncollectible. great reconciliation what
Effect in of balances. constitute the
banks (charges of Discounts included accounts
 the tickets of a the in the capital of
effect employees. work.
Verification The inventory is
of find in
embargoes. different
● Verify that locations, what
you have difficulty controlling it
a process and conteofsico. The
diversity management of the
adequate. partdas of
Evaluate the inventory crea
system difficulties for the
accounting auditor. The
Evaluation valuation del
of inventory records too
of it's difficult due to
news. factors such as the
obsolescence and the
necessity of
distribute the costs
de fabricación al
inventory. There are
various methods of
valuation of
what are inventories
acceptable, but
any client
must apply a
method of manner
uniform year after year
year.

D Detection risk: It is the risk Regarding the figures inside regarding the
where the auditor does not detect a in sales are staff the inventory must be
misrepresentation that may optimal, efficient and requires good management of a measure
to exist in the balance of an account or correct for security strict to
transaction that could be of high amounts what industrial for the moment of use
importance, or when it is added they require for the employees the raw material
with representations too company, to have one that is high for production,
erroneous in other balances or classes. good liquidity is temperatures and maintain the
very important for the dairy to
the development of your exponent the temperatures
operation. The level of employees is adequate
risk over sales and there is turnover while they go out to
collections are low, varied in the processes of
the figures are clear and employees and production for
transparent. it means expenses that do not cause damage
high in figures, raw material and
 requires adjusting this do not make that
better health raises costs
[Link] of production in
of medium risk. regarding the subject
first. The level of
risk is medium.

Adapted from:Arens, A. A., Elder, R. J., Beasley, M. S., and Valladares Franyuti, A. G.
(2007) Audit: A Comprehensive Approach ([Link].). Pearson, p. 240.