Case Study: Kroger Company

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FACTORS: Statement “The Risk Assessment Standards establish standards and provide guidance concerning the auditor’s assessment of the risks of material misstatement in a financial statement audit and the design and performance of audit procedures whose nature, timing, and extent are responsive to the assessed risks.” (Risk Assessment, 2017). An auditor doing a risk assessment would look at materiality, results from previous audits both internal and externa, data sources, among others and the auditor must look at the level of risk as well. Reviewing the income statement for Kroger Company there was an increase in Sales/Revenue for the year 2017 over 2016: 115.34B vs 109.83B respectively. While this increase of 5.01% is promising, the company’s …show more content…
The testing of internal controls is necessary to be sure that everything is working properly and also recommend revisions to said controls as needed.
• The auditor needs to do a sampling test to be sure that transactions that are booked are all valid and have actually taken place. This may help to verify the Net Income of Kroger.
• The auditor needs to also be sure to test to ensure that transactions that occurred where all done so in the appropriate accounting period. This will help to verify the cash and cash equivalents for the audit period and this may need to be done for the prior period.
• The auditor needs to review the accuracy of transactions recorded and the accuracy of when to help validate retained earnings.
• The auditor needs to validate the accounts and the transactions reported in the accounts to take a closer look at other asset accounts and review for …show more content…
The auditor should also include in the sampling the other assets as this is an area that has fluctuated over the past few years.
• The auditor should obtain a list of the Kroger assets
• A review of the assets and dollar figures associated with said assests
• The auditor needs to review the controls in place for asset purchases such as authorized persons with signing authorization levels and is the control documented.
• Review assets newly acquired as well as those sold within the last 2-3 years to aid in determining the fluctuations in this area for the past few years.
FACTORS: Procedures The Kroger Company audit will review many areas as it goes through the testing procedures to determine if the financial statements have any misstatements. There are three preferred audit testing procedures for this field audit: substantive procedures to aid in detecting material misstatements; test the account balances and detailed transactions for each account; review analytical

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