| Course | ACC 546 Auditing (ACC/546) |
|---|---|
| Week | 5 |
| Paper type | Audit program paper |
| Length | about 1,188 words, 4 double-spaced pages plus title page and references |
| Format | APA 7 student paper |
| School | University of Phoenix |
| Program | MS in Accounting |
| Updated | September 2026 |
Free sample paper for ACC 546 Week 5
An Audit Program From Cash to Keg Deposits: Designing Tests of Current Assets and Liabilities at a Composite Listed Beverage Distributor, With Each Step Tied to an Assertion
[Student Name]
University of Phoenix
ACC/546: Auditing
Week 5 Assignment
[Instructor Name]
[Date]
The distributor, its balances and the procedures' results are composites written for a model paper; standards and research findings come from the sources listed.
A composite distributor delivers beer, wine and spirits to about 11,000 bars, restaurants, hotels and stores in two states from four warehouses. It is listed on a national exchange, with revenue of $1.6 billion. At year end its current assets include cash of $38 million in three banks, receivables of $142 million and inventory of $118 million; current liabilities include payables to brewers and wineries of $96 million, accrued federal and state excise taxes of $21 million and keg deposits of $17 million, amounts customers paid for returnable kegs that the distributor must refund. Controls over revenue and purchasing were tested and found effective, allowing moderate substantive testing. An audit program is a list of questions about the balance sheet, each asked in the way most likely to catch the error that account is prone to. This paper presents the program.
Cash
The main risks are existence and completeness of cash and proper cutoff of receipts and disbursements. The team confirms all bank balances through a confirmation platform the auditor controls, including loans and other arrangements with each bank, as the PCAOB's revised confirmation standard emphasizes (Public Company Accounting Oversight Board, 2023). It obtains year-end reconciliations, traces reconciling items to the bank statements of the following month and obtains cutoff bank statements directly. It prepares a schedule of all transfers between the company's accounts in the last and first five days around year end to confirm that each transfer was recorded out of one account and into the other in the same period. Results: balances agreed; one $2.4 million transfer was recorded as received on December 31 but not deducted from the sending account until January 2, overstating cash by $2.4 million. Management corrected it; it was an error by a new treasury analyst.
Receivables
The risks are existence, driven by revenue pressure, and valuation, since small bars and restaurants often pay slowly. The team sends positive confirmations to the 60 largest accounts and a random sample of 90 others, controlling mailing and receipt. For nonresponses, it examines cash received after year end and delivery records signed by customers. It tests the aging by recomputing a sample of invoices' ages, and it evaluates the allowance by comparing reserve percentages with the last three years' write-offs and reviewing accounts over 90 days with the credit manager. Caster et al. (2008) noted that confirmation evidence depends on the auditor's control of the process and on following up nonresponses, which is why both are built in. Results: two customers disputed balances totaling $86,000 for returned product credited in January; the team proposed a cutoff adjustment.
Inventory
The risks are existence, valuation and cutoff. The team observes counts at two of four warehouses, rotating the others yearly, and makes test counts in both directions. It tests cutoff by examining receiving and shipping records dated in the last week of December and the first week of January. It tests unit costs against supplier invoices, including the federal and state excise taxes paid when products are received, which are part of inventory cost. It reviews wine inventory older than two years, since some vintages lose value, and compares recorded amounts with recent selling prices. Results: $310,000 of aged wine required a write-down to net realizable value.
Customer Rebates and Allowances
Brewers and wineries pay the distributor for promotions and volume incentives, and the distributor in turn grants retailers rebates. Receivables from suppliers for promotional support, $9 million at year end, were confirmed with the five largest suppliers and traced to promotion agreements, and rebates owed to customers were recomputed from sales data and agreed to payments in January. These amounts are small relative to revenue but prone to estimation errors.
Prepaid Expenses
The risk is low. The team recomputes prepaid insurance from policy terms and compares other prepaid balances with the prior year.
Accounts Payable
The main risk is completeness: understated liabilities make results look better. Confirming recorded balances would not address that risk well. Instead, the team examines all disbursements over $50,000 in the first 45 days after year end and unpaid invoices on hand, determining whether each relates to goods or services received before year end. It reconciles statements from the ten largest suppliers to recorded balances. Results: a $640,000 invoice for spirits received December 29 was recorded in January; the team proposed an adjustment.
Accrued Excise Taxes
Excise taxes are owed to federal and state authorities on products received or sold, depending on the jurisdiction. The team recomputes the December accrual from volumes and rates, compares it with the January returns filed and payments made and reviews correspondence with tax authorities for assessments. Results: the accrual agreed within $12,000.
Keg Deposits
Customers pay a deposit for each keg, refunded when the keg is returned. The deposits are a liability until refunded or until the keg is deemed lost. The team compares the keg count in the tracking system with a physical count at two warehouses and with confirmations from a sample of large customers, recomputes the liability at the deposit rate and evaluates management's estimate of kegs that will never be returned, which reduces the liability. Results: the tracking system overstated kegs held by customers who had closed, so the liability was overstated by about $450,000, an estimate management agreed to revise.
Timing and Extent
Because controls over revenue and purchasing were effective, the team performed some receivables work at an interim date in October, confirming balances then and testing the roll-forward to year end with analytics and cutoff tests. Cash, payables and the keg liability were tested at year end, since the risks in those accounts are concentrated at the balance sheet date. Sample sizes for confirmations and the payables search were set using the firm's sampling guidance at the assessed risk levels.
Using Data Analytics
The team ran two full-population tests. It compared every customer's credit balance with the keg tracking system to find customers whose deposits exceeded the kegs recorded, and it matched every January payment above $10,000 with receiving dates, automating most of the search for unrecorded liabilities and focusing manual review on exceptions.
Evaluating the Results
The team accumulated the misstatements: the cash transfer and payables cutoff, both corrected, and the receivables cutoff, wine write-down and keg deposit adjustment, also corrected. Uncorrected misstatements were below the trivial threshold. The team considered whether the cash transfer error indicated a control deficiency in treasury; it concluded it was an isolated error but recommended a second review of year-end transfers. The responses to assessed risks were consistent with the PCAOB's standard on the auditor's responses to risks (Public Company Accounting Oversight Board, 2010).
Conclusion
The program tested each current account for the risks it carries: double-counted cash, receivables from slow-paying customers, taxed and aging inventory, missing payables, excise tax accruals and keg deposits that depend on knowing where the kegs are. Each procedure was chosen for an assertion, and the results produced adjustments that management recorded before the statements were issued.
References
Caster, P., Elder, R. J., & Janvrin, D. J. (2008). A summary of research and enforcement release evidence on confirmation use and effectiveness. Auditing: A Journal of Practice & Theory, 27(2), 253-279. https://doi.org/10.2308/aud.2008.27.2.253
Public Company Accounting Oversight Board. (2010). The auditor's responses to the risks of material misstatement (Auditing Standard No. 13).
Public Company Accounting Oversight Board. (2023). The auditor's use of confirmation, and other amendments to PCAOB standards (PCAOB Release No. 2023-008).
What the ACC 546 Week 5 instructions ask
ACC 546 Week 5 generally asks graduate students to design audit programs for current assets and current liabilities. Typical requirements include identifying risks and relevant assertions for cash, receivables, inventory, prepaid expenses, accounts payable and accrued liabilities; selecting substantive procedures such as confirmations, reconciliations, cutoff tests, analytical procedures, observation and searches for unrecorded liabilities; tailoring the nature, timing and extent of procedures to assessed risk; and explaining how results are evaluated. Many prompts describe a company and ask for a program with justification. Tie each procedure to an assertion and a risk, and support the design with PCAOB standards and published research in APA form. Graders also look for the results and how misstatements were evaluated.
How this ACC 546 Week 5 example is built
A beverage distributor holds large receivables from thousands of small customers, inventory that is taxed and perishable in part and a liability for returnable kegs that many students would miss, so its current accounts test program design. The paper organizes the program by account. For each, it states the main risks and assertions and then lists the procedures with their purpose, noting where control testing allowed less substantive work and where risk required more. Confirmation design follows the PCAOB's revised standard. The search for unrecorded liabilities receives particular attention because the risk in payables is understatement. The paper closes with the results, the misstatements found and how they were evaluated against materiality.
ACC 546 Week 5 grading rubric: where the points go
Graduate grading for audit programs tends to reward procedures that match risks and assertions, correct direction of testing, sensible extent and timing and clear evaluation of results. Faculty check that cash procedures include confirmation and reconciliation testing, that receivable confirmations are designed and followed up properly, that cutoff is tested on both sides of year end, that payables are tested for completeness through a search for unrecorded liabilities rather than confirmation of recorded balances alone and that unusual liabilities, such as deposits, are addressed. Linking procedures to assessed risks, reporting results honestly and citing standards completes the grade, and noting where control reliance reduced testing shows judgment.
ACC 546 Week 5 help: mistakes to avoid
A frequent ACC 546 Week 5 mistake is testing accounts payable by vouching recorded invoices, which tests existence, when the main risk is that liabilities are missing. Search subsequent disbursements and unpaid invoices instead. Another is sending receivable confirmations and treating nonresponses as evidence; nonresponses need alternative procedures. Students also forget interbank transfers near year end, which can hide cash shortages. Name the assertion for every procedure. Explain how extent depends on risk and control reliance, with the sample sizes used. Include unusual accounts the business actually has, such as deposits or excise taxes. Finally, report results and how misstatements were evaluated, including any control recommendations.
Related ACC 546 sample papers
Other ACC 546 week samples
- ACC 546 Week 1: The Profession and the Auditor's Role
- ACC 546 Week 2: Planning the Audit
- ACC 546 Week 3: Audit Reporting and Communications
- ACC 546 Week 4: Evaluating Internal Controls
- ACC 546 Week 6: Programs for Other Cycles
More MS in Accounting sample papers
- ACC 541 Week 5: Pensions and Business Combinations
- ACC 542 Week 5: Auditing the Information System
- ACC 543 Week 5: Creditors, Property and Insurance
- ACC 545 Week 5: Deferred Taxes and Troubled Debt
ACC 546 Week 5 questions, answered
What does ACC/546 Week 5 usually cover?
It usually covers audit programs for current assets and liabilities, including procedures for cash, receivables, inventory, prepaid expenses, accounts payable and accrued liabilities tied to assertions and risks.
Where can I find a free ACC 546 Week 5 sample paper?
The beverage distributor's audit program, from cash to keg deposits, is presented here in full with the reason for each procedure noted beside it, free to all readers. Your own program case can be drafted at no cost.
What is a search for unrecorded liabilities?
A procedure in which the auditor examines payments made and invoices received after year end to find liabilities that existed at year end but were not recorded.
Why test transfers between bank accounts at year end?
Because a transfer recorded as a deposit in one account before year end but not yet deducted from the other can temporarily count the same cash twice, a technique used to hide shortages.
What did the PCAOB's revised confirmation standard emphasize?
It emphasizes the auditor's control over the confirmation process, the use of confirmation for cash and receivables in most circumstances and the evaluation of responses and nonresponses.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official University of Phoenix document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
Request this one custom, free · All ACC 546 week samples · All courses