Statement of work - Essay Example

The firm has an annual budget of four million dollars and employs a staff of about 50 employees. Salaries, benefits, and rent constitute nearly 80% of the $4 million dollar budget. Objective The objective is to carry out a financial annual audit of the Purchaser’s resources in accordance with the rules and principles set by the government. Also, the Contractor shall analyze and evaluate the internal control. All the basic financial statements have to be audited by the Contractor that present the Purchaser’s revenues, expenses, and balance.

All the currencies shall be expressed in US Dollars including the statements, schedules and the cost rates. Scope The Contractor shall supply all the labor, resources, services that are necessary to perform the annual audit of the Purchaser. An audit of the Purchaser’s financial statements should be performed by the Contractor in accordance with the generally accepted rules and standards laid down by the government for auditing. For the above requirements to be met, the Contractor shall use the guidance provided by the President’s Council to assist the auditing.

The Contractor must examine the financial statements that include the revenues received from programs that have been funded by the Purchaser’s company. . If the financial systems require the application of any information systems then the Contractor shall obtain an understanding of the working of the system considering the internal control and carry out tests to make sure that the system is functioning as intended. In the case of non-operational controls, the Contractor shall also provide evidence to support why any control is not functioning as it should, and shall provide recommendations to improve the system.

The above standards shall also be followed by the Contractor while preparing reports including an opinion report, internal control report and reports analyzing the conformity with rules and regulations. Requirements for Financial Audits The Audit Performance: An audit of all the financial statements of the Purchaser’s company shall be performed by the Contractor according to auditing principles laid down by the government and based on the guidance issued by the government relating auditing requirements.

The same standards shall be followed while preparing reports and other documentations. All the reports shall be incorporated in one Performance Report that shall be received by October 15th, 2013. Documentation: The annual financial audit documentation must include: a) A formal work plan including a schedule for completing the audit at each step, the staff that have been assigned for the audit, and a schedule of the site visits. b) An evaluation of the risks including general risk, control risk, fraud risk and so on. c) The set of audit procedures being followed d) The testing plans e) A memo summarizing the conclusions reached on the findings Internal Control Requirements An understanding of the internal controls shall be acquired in order to plan the audit.

A detection risk should be