Training Program Essay

Training Program: Coop Training Program: Ernst & Young


This study is aimed at discussing the practical audit work, which is a significant component of the coop training program. Ernest & Young- Saint Louis, MO has been chosen for this study, hereafter referred to as EY. The company is the preferred choice because it presents the global presence of EY in general as well as its presence and growth.

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Methods, Sources and Processes

During the training program, the management of EY charged the Coop trainee with the responsibilities aimed at ensuring that he achieves outstanding client services, professional conduct alongside the organizational regulations and values, professional development on a continuous scale, and compliance with the professional standards. In this regard, the trainee had to perform the following responsibilities (Schunk, 2004). Participate and create an effective channel of contributing while helping the organization to attain efficient and outstanding client services aimed at meeting the changing needs of the company’s clients and stakeholders. Therefore, the management expects the trainee to behave in a professional way, thereby observing provisional regulations and values of the organization. In order to achieve the desired performance level, the Coop trainee would have to participate actively in the programs, which will ensure his professional development. Such programs include in-house training sessions, which help the trainee to brainstorm and identify evidential opportunities for the organization in order to conduct its various audit engagements in sustainable and sufficiently efficient way (Kirkpatrick & Kirkpatrick, 2007). Further, dealing with a matter of professional conduct, the trainee has to ensure that he uses the various audit tools and electronic papers appropriately. Consequently, the management (supervisors) of EY expected the Coop trainee to provide that each section of the completed work is tested against the professional provisions of the organization. Moreover, they have to ensure that it is included in the audit plan as stipulated in the organizational guiding tools and methods as well as the international standards of auditing. Such provisions include the fact that the audit team must ensure that they gather sufficient audit evidence and document it in accordance with the guidelines of EY. Moreover, the trainee had to ensure that he develops acceptable team effort while working with the audit team and executing field work within the premises of the client. This involves assisting in the development and preparation of the various deliverables necessary for the audit engagement (Arens, Best & Shailer, 2010).

The Training Program

Training Methods

The training program relied on the case studies,  job training methods, and group discussions. Focusing on the employees in their discussion of the audit process, it was  observed that auditing is fundamentally a system of processes. It is aimed at obtaining and examining audit evidence with a bias in order to ensure that the evaluator gives an objective economic opinion about the issue that affects the operations of the client organization. Therefore, audit process involves identifying assertions of the financial statements of the client organizations, evaluating assertions against the set professional standards and later establishing evidence against the assertions. Once the evidence is evaluated, the auditor supplies the client with clear communication regarding the findings of the audit. Therefore, any action impairing the auditor’s ability to provide objective communication is referred to as the audit evidence (Arens et al., 2010). The following figure summarizes the details of audit process that the trainees need to understand.

Figure 1.0. Audit process 

Learning Theory

This training program incorporates Kirkpatrick’s learning and evaluation theory. The trainees considered that the training was relevant to them. The program enabled the trainees to learn the required issues. Moreover, the training employed relevant skills and auditing knowledge, which enabled the trainees to apply them practically. Finally, the corresponding test revealed that employees’ productivity improved significantly after the training process. It was evident because the quality rating of the company also increased (Kirkpatrick & Kirkpatrick, 2005). Learning theories were applied to the assessment of the client’s needs, and this is the core procedure of the training program. Whether the client seeks the audit firm’s services or the firm offers its services to the client, the organization must reach understanding with the client. In order to reach this aim, the firm must define whether it is ready to accept the client. Moreover, the firm must identify the reasons of the client’s request for the audit work. The client, on the other hand, must clearly understand the competency level of the audit firm while ensuring that it meets the objectives he seeks by engaging the firm. Once both parties have reached the underlying background of their interaction, they must try to establish a mutual understanding regarding the engagement terms. It is normally documented in the engagement letter (Schunk, 2004). The engagement letter includes the auditors’ understanding with the client as far as the objectives of the audit and engagement is concerned. The letter will also contain the responsibilities of both parties while ensuring that the objectives of the engagement are achieved. Consequently, the engagement letter will articulate the specific responsibilities of the management in the client organization as well as the duties of the auditor. In addition, it will embrace the limitations of the engagement providing a caveat on the operations of each party regarding the engagement. Moreover, the engagement letter may contain the agreement allowing the audit firm or the auditor to provide other services as documented. The clear guidance on the fees that both parties agreed to involve in the audit work will be also specified in the letter. However, it is imperative to note that audit engagement letter will not affect the auditor’s responsibility to provide the external users with fair and representational information (Arens et al., 2010).

Understanding client’s business and industry is one of the predominantly influential stages of auditing, especially if the auditor is implementing the first year audit. At this stage, the auditor must objectively and critically evaluate the industry, in which the client’s organization operates. Moreover, he should assess the prominent and underlying regulations in the industry and other external factors that might affect the reporting capability of the client’s business. However, in order to expand the scope of the evidence, the audit firm and the auditor must assess the operation level of excellence in the organization. Therefore, the auditor should visit the plant and offices since this will enable him to identify related parties and understand operations and processes of the client’s organization. In addition, he must further assess the  controlling environment of the entity. Such controls include the company’s constitution, policies, ethical provisions and minutes of any recently held meeting (Kirkpatrick & Kirkpatrick, 2005). Moreover, to elucidate better the auditor’s understanding of the client’s business and industry, the auditor must evaluate the client’s organizational objectives and strategies. This will provide evidence concerning the reliability of the financial statements, the effectiveness and operational efficiency as well as the overall entity’s endeavor to comply with the laws and regulations governing the industry (Arens et al., 2010). Moreover, the auditor will assess the available measurement and performance review strategies that the client’s business employs in its daily operations. This assessment will focus on the smart key indicators of the performance that the management utilizes to assess the individual’s progress towards the achievement of the overall organizational objectives.

Transfer of Training (ToT)

Due to the transfer of training, the trainees apply practically their knowledge that they had gained during the exercise. It enhanced efficiency and productivity among the employees since they learnt in their designated job areas. For example, regarding audit planning, the auditors must undertake planning as a primary stage. The professional standards of auditing (ASA 300) provide that audit firms and auditors should plan their engagements (Arens et al., 2010). Planning of  audit has several advantages, including the fact that it enables the auditor to obtain sufficient, appropriate and relevant evidence necessary for the resultant opinion. It also helps the auditor to ensure sustainability  following reasonable level of the audit costs. Moreover, a carefully planned audit will help the auditor to avoid misunderstandings with the client in compliance with the provisions of the engagement letter. The following figure shows the stages involved in the procedure of audit planning. Some of the stages are identical to the overall processes of auditing.

Figure 2.0. Planning stages

Audit planning is significant in enabling the auditor to establish the various levels of risks associated with the specific assignment. There are two main types of risks that the planning will focus on, namely acceptable audit risk and the inherent one. Acceptable audit risk exposes the auditor’s willingness to agree that assertions in the financial statements are materially misstated when an earlier opinion has been issued. Inherent risk, however, assesses the auditor’s judgment of the possibility that account balances will be materially misstated without considering the efficiency and capability of the systems for internal controls (Arens et al., 2010). The knowledge and skills gathered during the training facilitate a thorough understanding of the audit exercise.

Evaluating the Success of the Training Program

Job performance effectiveness would be the key requirement during measurement of the training program success since the trainees are assessed according to their performance, before and after the training. The improvements made by employees are always noted, especially after the training exercise. For example, the trained auditors must successfully apply analytical procedures after the training exercise. Generally performed at the planning stage, preliminary analytical procedures provide the auditor with both financial and non-financial overview of the client’s organizational position. The objectives of preliminary analytical procedures would include ensuring better understand of the client’s business as well as establishing appropriate assessment of the client’s business risks (Kirkpatrick & Kirkpatrick, 2007). Consequently, the auditor will employ benchmarking strategy to compare the client’s organizational ratios with the applicable rates of the corresponding industry. Such benchmarks will enable the auditor to uncover easily any unusual or material deviations from the normal operational capability of the client’s organization. Therefore, the auditor will compare the current ratios against prior years’ and the overall averages in the industry. This endeavor will support the auditors’ motive of establishing key areas with increased risks of material misstatements (Arens et al., 2010). In addition to the preliminary assessment of the business risks, which the client is facing, the audit planning will focus the auditor’s actions on assessing, evaluating and investigating the possibility of fraud in the financial statements of the client. This involves the auditor in the performance of additional analytical procedures specifically designed for the revenue account balances. The aim is to establish whether there is any unusual collaboration to defraud the organization in relation to the revenue account balances (Kirkpatrick & Kirkpatrick, 2007). Materiality concept is applicable when the auditor is planning the nature, extent and timing of all the procedures that he ought to employ while completing specific audit assignments. In addition, the concept can be employed when the auditor seeks to evaluate the effect of material misstatements within the specific components of the financial statements. In this regard, materiality will refer to any information, which the client omits or misstate. It will have significant potential in affecting the final decision of the user on the fair and measurable presentation of the financial statements. Such information may include the client’s decision to allocate its scarce resources and discharge accountability of the management’s role beyond the necessary scopes (Arens et al, 2010). The figure below shows the various stages of applying materiality in any audit assignment.

Figure 3.0. Materiality steps

While preliminarily assessing the materiality, the auditor will make a professional judgment of the maximum amount. Moreover, he is convinced that the client’s business could misstate information, but remain reasonably fair to the users of the financial statements. However, it is important to note that this level of materiality is bound to change since the auditor is engaged with practical financial statements. This implies that during the actual audit practice, the auditor will always adjust the materiality level to enable him to ensure the possibility of giving biased opinion (Kirkpatrick & Kirkpatrick, 2007).

While applying the materiality concept, the auditor could employ either bottom-up or top-down approach. On one hand, the bottom-up approach enables the auditor to assess materiality in the various accounts individually and in separate contexts and, then, to establish the resultant effect of the evaluation combing the various results. On the other hand, the top-down approach involves the auditor in assessing the materiality of an overly significant account balance and scaling the resultant figure to the various components of the account balance (Arens et al., 2010).

The auditors employ the materiality concept by ensuring that they maintain a worksheet of all actual and possible misstatements they discover while performing the necessary audit procedures in compliance with the provisions of the engagement letter. The auditor then groups the misstatements into known and similar categories. Once the auditor completes the relevant audit procedures, he will evaluate the two categories of misstatements and provide an opinion whether the client audit of the customer’s business internal controls reveals worrying results. It is significant to influence the users of the financial statements regarding the value they will associate with the organization (Kirkpatrick & Kirkpatrick, 2007).

In general, the auditor may decide to focus on percentage composition of materiality in the various accounts he chooses for assessment. Moreover, he may decide to apply a blended method that incorporates different approaches discussed above. However, the auditor will have to support the decision by providing background information about the analysis of the client’s business situational and the applicable levels of uncertainty (Arens et al., 2010).

The training program highlights that when conducting any audit assignment, the auditor must be cognizant of the fact that there are significantly high chances of uncertainty inherent in the process, especially concerning the appropriateness of the evidence to be collected. The auditor should also understand the prevailing uncertainties concerning the effectiveness of the client business’ internal controls. Moreover, the auditor must assess its relevant levels to define whether the financial statements provide the necessary fair view of the organization’s financial position, especially when the audit report is not provided. Therefore, the auditor will need to respond adequately to the prevailing risks in order to provide a highly informed audit quality (Arens, Best & Shailer, 2010).

If the auditor establishes sufficient understanding of the client’s business and industry while evaluating the financial statement risks, such as the misstatement presented by the client, he will always employ audit risk model, which enhances the possibility of identifying the misstatements. The model will also enable the auditor to focus on the specific points of deviation and, thereby, define a clear concept of where the misstatements may occur in the financial statements (Schunk, 2004).

Resulting from fraud or error, the inherent risk occurs if the financial reports or any section of the statements that the auditor reviews is materially misstated without considering the provisions and work of the organizational internal controls. In order to assess the inherent risk, the auditor must employ individual professional judgment based on the background of the client’s business as specified in the business analysis section. Therefore, the auditor will only assess the inherent risks effectively after analyzing the entity business during the second process of the audit procedures. Therefore, it will be necessary to measure the auditor’s capability while assessing the possibility of material misstatements in the given section of the financial statements. This is effective before the auditor assesses the organizational internal control dynamics (Arens et al., 2010).

Either due to the weak internal controls or mismanagement, the control risk assessment focuses on the possibility of various internal control procedures failing to detect material misstatements. The matrix here is the auditor’s capability to assess whether the material misstatements in the financial output result from the failure or manipulation of the organizational internal controls. Stronger internal controls guarantee that there could not have been control risks. This implies that the effectiveness of the internal controls is significant to influence the auditor’s judgment of the control risks. The other parameter will be the timeliness and detection ability of the client to provide feedback regarding the control risk (Arens et al., 2010).

This risk is basically associated with the appropriateness of the audit procedures that an auditor utilizes while completing the audit assignment. However, these procedures may fail to detect the material misstatements. This possibility is referred to as the detection risk. Moreover, the auditor has to execute sufficient substantive tests to establish whether there are material misstatements. However, if these tests are not robust enough, then there is a possibility of detection risk (Kirkpatrick & Kirkpatrick, 2007).

In general inherent risk, the control risk and detection risk assessments are primarily estimates based on the professional judgment of the individual auditor and the relevant evidence collected during the audit assignment, especially in the preliminary analysis of the client’s business. The resultant product of these estimates constitutes the audit risk (Arens et al., 2010).

Being a product of the above mentioned risk estimates of the professional auditor’s judgment, the audit risk is the possibility of the auditor to subject the entity to the incorrect opinion or direction regarding fairness and compositional presentation of the financial statements. Therefore, the assessment of audit risk exposes the willingness of the auditor to accept that the financial accounts and reports, which might be materially misstated, when he completes the audit work and issues unmodified opinion (Kirkpatrick & Kirkpatrick, 2005).

In order to be engaged with any audit, each party has purposeful responsibilities to ensure that the assignment is successful. One of the key tasks, which requires responsibility of the both parties as well as the auditor and client business management, is assessment of the systems for the internal controls. Therefore, the management is always responsible for establishing and maintaining organizational audit, which should be aimed at ensuring that the company possesses sufficient internal controls. Consequently, the client entity should develop robust internal controls, which enable the management to provide reasonable assurance to the other stakeholders that the financial statements show fair representation of the actual operational and management capability of the firm under consideration (Arens et al., 2010).


In conclusion, the training program highlighted the audit process in EY. While implementing audit assignment, the professional auditor in EY will perform three simultaneous and systematic functions. These functions include audit tasks completion, conducting and coordinating technical activities and communicating with the client.

When fulfilling audit tasks, the professional auditor conducts various activities aimed at ensuring that the assignments achieve the desired outcomes, which include providing value to both the clients and the general public who depend on the resulting recommendations. These audit tasks involve mobilizing all the audit team and relevant stakeholders and focusing their efforts on the assignment, building necessary evidence and completing the work assigned in the appropriate time.

While mobilizing, the audit professionals will undertake professional guiding role in channeling the team’s energies towards enhancing the quality of the report. Moreover, this involves the audit team in planning procedures appropriate for the audit. Audit planning is the process of ensuring that every necessary component of the audit is considered in order to enable the respective professional to undertake the assignment without avoidable hitches. The plan is strategic to help the auditor to reduce acceptable levels of the audit risk. The reason is that the audit official is able to establish a strategy for engaging the client and the rest of the team and, thereby, envisaging an appropriate audit plan for the assignment. Thus, mobilizing will involve the following necessary tasks.

Engaging the client, in accordance with provisions of the international standards of auditing number 260 (ISA 260), the audit firm must ensure that they provide sufficient communication to the client’s management. This concerns the pertinent issues, including the general scope of the audit, the approaches, limitations and any other requirement that the audit official deems necessary. This engagement is fundamental to ensure minimal conflicts or their absence between the management and the audit professionals. In order to avoid such conflicts, the audit professional will prepare an engagement letter, build the engagement team, and develop the audit strategy. The engagement letter will aid in raising important issues and providing guidelines, including each party’s responsibilities to ensure that the audit assignment achieves the desired outcome.

However, the audit strategy specifies logistical arrangement of the prior activities that will develop into the audit plan. Such activities include coordinating the initial team meeting between the engagement leader and the audit team. During this meeting, the group will discuss and design various strategic guiding policies, including the applicability of materiality to the circumstances of the client’s business. Moreover, they will review sufficient communication aids and channels between the audit team and the client as well as overall project plan, which will assist the team in designing appropriate audit plan. Consequently, the team will prepare an audit plan, which will guide them in collecting necessary evidence and conducting various tests to establish the underlying policies and frameworks within the organization. The audit team will specify their comfort limit in the plan with the help of templates that discusses audit comfort matrix as well as necessary steps to be undertaken and other initial considerations.

The trainees need to understand that after mobilization, and sometimes concurrently, the audit team will focus on strategies aimed at building sufficient evidence. This process involves the team in approving and signing of the audit plan. Moreover, the audit team will engage in meetings focused on ensuring that they employ robust tools of investigating and questioning the available evidence.

The team will conduct substantive procedures to obtain the relevant evidence. They will include substantive tests, analytical procedures, and audit transactional tests of detail. After the tests completion, the team will review and record all the details of the performed work in order to provide insights into the background of the organization, materiality level and the necessary improvements of the client business.

Once the team has completed all the necessary tests on the evidence and recorded the work in an audit file designed for the client, they will sign it, prepare and audit report in accordance with the professional standards of auditing as well as underpinning local regulations and communicate the report to the client. Then, the engagement leader will debrief the engagement team and request the client to provide feedback on the service provided. This is necessary to ensure that the firm receives feedback on the work completed.

The training program enabled the trainees to apply Kirkpatrick’s evaluation theory in the technical activities. During the initial planning of the audit assignment and in concurrence with some of the audit tasks discussed above, the audit executive will conduct technical activities aimed at ensuring that the assignment is free from undue pressure and is as objective as necessary. Therefore, the audit professional will assess whether the EY is capable of accepting client or to continue servicing the current clients. Moreover, the audit official will examine the client’s reasons for an audit after which the engagement team will obtain the necessary mutual understanding with the clients regarding provisions of the engagement letter.

While investigating the new client, EY audit official will assess his acceptability using the template files within the resources of the firm. The template files are designed to examine the client’s overall status in the community and the business environment in which it operates. Moreover, the templates will assess the financial stability of the client following general feeling of the public. Moreover, the templates will provide relevant information about the client and the previous auditing firms. This implies that the templates will seek to explore the historical background of the client and his interaction with the previous audit service providing firms.

Special challenges experienced during the training were witnessed while managing the conflict between the client firm and the company since the trainees did not reach full agreement regarding audit fees, scope, and opinion harmonization. During these technical activities, if a conflict arises between the client and the audit firm in relation to the scope regarding audit fees and the type of opinion, then the audit executive will review the possibility of terminating the contract with the client. However, if there are no material conflicts, including conflict of interest, the audit professional will seek to discuss the other components of the audit with the management.


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