AC410 Unit 5 Audit Program Draft Example

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Fourteen procedures answering two significant risks make up this AC410 Unit 5 audit program draft at a composite maker of stair lifts. Purdue Global AC 410, Auditing, asks BS in Accounting students to convert a risk assessment into procedures aimed at named assertions. Because Hallcroft Lifts' review of warranty assumptions failed in the walkthrough, the warranty reserve is tested entirely by substantive work, including an independent claim rate built from three years of claims and a reconciliation of the April system conversion. Dealer rebates are recomputed for all 140 dealers. Revenue cutoff, confirmations, aging, margin analytics and a search for product claims cover the rest. Each line names its assertion, its risk and its nature, timing and extent.

CourseAC410 Auditing
UnitUnit 5
Paper typeAudit program draft
LengthAbout 620 words, 5 pages double-spaced
FormatAPA 7 student paper
SchoolPurdue University Global
ProgramBS in Accounting
UpdatedOctober 2026

Free sample paper for AC410 Unit 5

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Fourteen Procedures for Two Significant Risks: A Unit 5 Audit Program Draft for a Stair Lift Maker

[Student Name]

Purdue University Global

AC410: Auditing

Unit 5 Audit Program Draft

[Instructor Name]

[Date]

Hallcroft Lifts and every figure are composite; the standards and textbook cited are real.

What this part is doingLinking the program to the walkthrough finding in the lead shows the plan responds to evidence already gathered.
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Header

Significant risks: warranty reserve valuation; dealer rebate accrual completeness and valuation. Materiality: $96,000 overall, $72,000 for performance, and $60,000 specific to the reserve and to the rebate accrual. Control risk for the warranty reserve: maximum.

Program

Each line gives the procedure, the assertion, the risk answered, and nature, timing and extent.

Warranty reserve

1. Agree the reserve rollforward, opening balance plus expense less claims paid, to the general ledger. Accuracy. Reserve misstated. Recalculation; year end; all.

2. Reconcile claims in the new warranty module to the old system's claims for the three months before the April conversion. Completeness of data. Claims lost in conversion. Inspection and recomputation; interim; all overlapping months.

3. Compute claim rates by model and by year of sale from three years of claims, and develop an independent range for the claim rate. Valuation. Rate understated. Analytical procedure; year end; full claim population.

4. Test cost per claim by tracing 25 claims to parts costs and dealer labor credits. Valuation. Cost per claim understated. Inspection; year end; 25 claims selected by value.

5. Obtain the evidence behind the change from 2.9 to 2.1 percent, including failure data for the new drive motor. Valuation. Unsupported assumption. Inquiry and inspection; year end; the single change.

6. Compare claims paid in January and February with the reserve. Valuation. Reserve too low. Inspection; after year end; all claims paid.

Procedure 3 builds the auditor's own claim rate from the claims data rather than reviewing management's, because with no working control over the assumption, only an independent range can show whether 2.1 percent is reasonable.

What this part is doingThe highlighted sentence explains the program's central response to the control failure, the link graders check.
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Dealer rebates

7. Recompute each dealer's year-end volume from shipment data and apply the rebate tiers. Completeness and valuation. Accrual understated. Recalculation; year end; all 140 dealers.

8. Trace rebate credits issued in January and February to the accrual. Completeness. Unrecorded rebates. Inspection; after year end; all credits.

Revenue and receivables

9. Test cutoff by inspecting shipping records and invoices for shipments from December 22 to January 10. Cutoff. Revenue in the wrong year. Inspection; year end; all shipments in the window.

10. Confirm balances with the three large dealer groups and a selection of others, to at least 70 percent of receivables. Existence. Fictitious or overstated balances. Confirmation; year end; positive confirmations.

11. For nonresponses, inspect subsequent receipts and shipping records. Existence. As above. Inspection; after year end; each nonresponse.

12. Age receivables and evaluate collectibility of balances over 60 days and of any dealer in financial difficulty. Valuation. Allowance too low. Inspection and inquiry; year end; all past-due balances.

13. Perform analytics on gross margin by model and quarter. Occurrence and valuation. Unexplained margin change. Analytical procedure; year end; all quarters.

14. Read the minutes and inquire of counsel about warranty or product claims. Completeness. Unrecorded liabilities. Inquiry and inspection; year end; all minutes.

Why These Choices

Nature, timing and extent follow from the assessed risks: higher risk calls for more persuasive procedures, performed nearer year end and over larger samples (American Institute of Certified Public Accountants, 2021). Evidence from outside parties, such as dealer confirmations, and evidence the auditor produces directly, such as recomputed rebates, is generally more reliable than management's own records (American Institute of Certified Public Accountants, 2020). Recomputing rebates for every dealer, rather than a sample, reflects that the population is small and the risk significant. Responses to significant risks must include substantive procedures specifically responsive to them (Arens et al., 2020).

What this part is doingEnding on the reasoning behind nature, timing and extent shows the program is designed, not copied.
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References

American Institute of Certified Public Accountants. (2020). Statement on Auditing Standards No. 142: Audit evidence. AICPA.

American Institute of Certified Public Accountants. (2021). Statement on Auditing Standards No. 145: Understanding the entity and its environment and assessing the risks of material misstatement. AICPA.

Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2020). Auditing and assurance services (17th ed.). Pearson.

AC410 Unit 5 instructions, in plain terms

Unit 5 of AC410 asks for an audit program that turns the risks you assessed into specific procedures. Head the program with the significant risks, the materiality figures and the control risk conclusions it relies on. Group procedures by account. For each, state the procedure itself in a sentence, the assertion it addresses, the risk it answers and its nature, timing and extent. Where controls cannot be relied on, the program must say how substantive work makes up for them. Include at least one procedure that develops the auditor's own evidence rather than reviewing management's. Cover cutoff, existence and valuation where they matter, plus subsequent events and inquiry of counsel. Close with a short explanation of why the nature, timing and extent fit the risks. Cite the AICPA standards on evidence and risk assessment and the textbook in APA 7.

How the AC 410 Unit 5 example is put together

The header restates the two significant risks, the three materiality figures and the maximum control risk for the reserve. Six warranty procedures run from agreeing the rollforward and reconciling the system conversion to testing 25 claims for cost and comparing January and February claims with the reserve. The highlighted sentence explains why procedure 3 builds the auditor's own claim rate. Two rebate procedures recompute every dealer's volume and trace post-year-end credits. Six revenue and receivable procedures cover a December 22 to January 10 cutoff window, confirmations to 70 percent of receivables, alternatives for nonresponses, aging, margin analytics and minutes and counsel. A closing section explains the choices with SAS 145 and SAS 142 and notes why the small rebate population is tested in full.

Where the points sit in the AC410 Unit 5 rubric

AC410 audit programs are graded on how directly each procedure answers an assessed risk. A procedure with no stated assertion or risk earns little, however standard it sounds. Nature, timing and extent must be specified, and they should become more rigorous as risk rises. Where a control failed, the program must show a substantive response to compensate, and graders check for that link to earlier units. Procedures that generate independent evidence, such as recomputation or confirmation, score higher than those relying on management's records. Coverage matters: existence, completeness, cutoff and valuation for the accounts at risk. A short rationale for the design shows the program was built, not copied. Accurate use of assertion categories and APA 7 citations to the evidence and risk standards finish the Purdue Global list for Unit 5.

Common AC410 Unit 5 mistakes, and how to avoid them

Many Unit 5 programs copy a textbook checklist with procedures that answer no particular risk. Assertions are missing or mismatched, such as confirmations listed for completeness. Timing and extent are left out, so the procedure cannot be performed as written. A control failure found earlier is ignored and the program still relies on the control. Every procedure reviews management's own figures, with nothing the auditor produces independently. Cutoff windows are vague. Subsequent events and counsel inquiries are forgotten. The rationale paragraph repeats definitions. If your case covers inventory, payroll or long-term debt, our writers can draft the program around the risks and controls your earlier units found.

Get an AC410 Unit 5 example written to your instructions

Your planning memo or risk assessment from earlier units, plus the case facts and rubric, are the inputs this program needs. Each procedure returns tied to a named assertion and a stated risk within 24-48h, its extent scaled to the materiality in your case. A first custom sample is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

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AC410 Unit 5 questions, answered

Which assertion categories should I use?

Those your textbook teaches, which for a private client usually follow the AICPA standard: occurrence, completeness, accuracy, cutoff and classification for transactions; existence, rights and obligations, completeness, and accuracy, valuation and allocation for balances; presentation for both. PCAOB standards group them somewhat differently for public companies. The sample names its framework in the header so a grader knows which list applies.

Where can I find a free AC410 Unit 5 sample paper?

This page holds a complete AC410 Unit 5 audit program draft for a composite stair lift maker, with fourteen procedures, each tied to an assertion and a risk, plus a design rationale and APA 7 references.

Why does the AC410 Unit 5 program build its own claim rate?

The walkthrough found that no one had checked management's 2.1 percent against data. Without a working control, only an independent range computed from the claims history can show whether that rate is reasonable.

Why recompute rebates for all 140 dealers instead of sampling?

The population is small, every dealer's tier depends on volumes already in the shipment data, and the rebate accrual is a significant risk, so testing every dealer costs little more than a sample and removes sampling risk.

What does the AC410 Unit 5 program do about the April system conversion?

Procedure 2 reconciles claims in the new warranty module with the old system's claims for the three overlapping months before April, so the claim rate is not computed from data that lost or doubled claims.