Auditing Walmart
Purpose and Contents of Management’s Report on Internal Control Over Financial Reporting for Walmart
Contents.
A statement describing the responsibility of the management to establish and maintain adequate Internal Control over Financial Reporting (US sec, 2019). This disclosure is an assertion from the administration to demonstrate responsibility for and commitment to Internal Control over Financial Reporting.
A statement that identifies the framework used by the management of Walmart to evaluate the effectiveness of Internal Control over Financial Reporting. The management must provide material evidence, documents, and reasonable support about the effectiveness of Internal Control over Financial Reporting.
An assessment from the management on how effective the Internal Control over Financial Reporting as at the end of the most recent financial year, and include statements supporting whether it is effective or not. Disclosure of any material weakness identified is included.
A statement showing that a registered public accounting firm that audited financial statements issued an attestation report on the Internal control over Financial Reporting, i.e., an external auditor has issued an audit report on the effectiveness of Internal Control over Financial reporting when Walmart files the 10-K
The purpose of the Management Report on Internal Control over Financial reporting is to provide Walmart with a reasonable basis for a yearly assessment on any material weakness on the effectiveness of the Internal Control over Financial Reporting regarding (Kral, 2017);
- maintenance of records that are in reasonable detail and that the records are accurate and fair in reflecting the transactions and dispositions of all assets that belong to Walmart,
- provision of sufficient assurance that all occurring transactions are recorded to allow for the preparation of financial statements in accordance with the Generally Accepted Accounting Principles. Also, to ensure that all receipts and expenditures of the company are only made following the authorization of management and directors of the company and,
- provision of necessary and reasonable assurance in regard to the prevention and timely detection of unauthorized acquisition, usage, or disposition of all assets belonging to the company that has material and monetary effects on financial statements of the company.
The report enables Walmart to produce reliable financial statements that investors use to make investment decisions.
Purpose and Content of the Independent Registered Public Accounting Firm’s Report on Internal Control Over Financial Reporting for Walmart
The purpose of the report is for the independent accounting firm to express an opinion on the effectiveness of Walmart’s Internal Control over Financial Reporting. Therefore, Walmart uses the report to ascertain how effective its Internal Control over Financial Reporting is and provide reasonable assurance over the reliability of financial reporting and preparation of financial statements (Munter, 2015).
Walmart uses the report to identify any material weakness specified at the date of assessment in case the Internal Control over Financial Reporting is found not to be effective. Material weakness may occur in the Internal Control over Financial Reporting, even when there are no misstatements in financial statements.
The report also provides enough evidence in support of the opinion of an Independent Registered Accounting firm on the Internal Control over Financial Reporting of Walmart, giving the firm assertion about its effectiveness during financial reporting.
Contents
Title and addressee. The report contains the title of the report, i.e., ‘Report of Independent Registered Accounting Firm of Walmart’ and addressed to the shareholders and board of directors of Walmart (US sec, 2019).
The accounting firm’s opinion on the Internal Control over Financial Reporting, based on sources including the audit of test controls, detected misstatements during the inspection of financial statements, and identified control deficiencies. Includes the name of Walmart, whose Internal Control of Financial Reporting is under audit, and the opinion on whether the company has maintained, in all material aspect, effective Internal Control over Financial Reporting at a specified date, as per the controlled criteria (US sec, 2019).
The basis for the opinion, including statements that;
the firm is an independent firm registered with the Public Company Accounting Oversight Board,
the management is responsible for maintaining an effective Internal Control over Financial Reporting,
that the firm’s responsibility is to express an opinion on the company’s internal control over financial reporting and
a statement that the analysis was done under the standards set by the Public Company Accounting Oversight Board, etc.
Purpose and Contents of the Independent Registered Public Accounting Firm’s Report on the Financial Statements for Walmart
This report is a document containing opinions of the accounting firm on whether a company’s financial statements comply with the Generally Accepted Accounting Principles, and documents that the financial statements of Walmart are free from error. The report contains the responsibilities of auditors and directors of Walmart. Another content of the report is the scope that states that the set standard accounting practices as outlined by the Generally Accepted Accounting Principles were the guides followed. Finally, the report contains the opinion of the accounting firm depending on the findings.
The opinion may indicate clear/unqualified in case the financial statements of Walmart correctly agree with the Generally Accepted Accounting Principles. A qualified opinion will mean that Walmart did not comply with proper accounting principles but did not do anything wrong. An adverse opinion is when the accounting firm finds out that the company did not follow adequate accounting rules, as well as have discrepancies in the financial statements. This opinion indicates that the accounting firm has a suspicion of material misstatements and misrepresentations in the financial statements. A disclaimer opinion suggests that for some reason, the firm did not complete the audit or chose not to provide an opinion due to one reason or another.
Purpose of the report for Walmart.
Walmart uses the report to assess the correctness of the financial statements of Walmart and whether they are prepared using the applicable accounting framework and to show the integrity of the management of the company.
Walmart also uses the report as evidence of the integrity of the management to shareholders and investors of Walmart. Based on the opinion of the report, investors and shareholders can imply that the management is honest in running the firm.
The report serves as an attraction for new investors for Walmart. Potential investors will examine both the financial statements and the report from the accounting firm to ascertain if the financial statements are attractive and the financial position reliable (Rudhani et al., 2017). If the report claims that financial statements are not true, investors will shy away.
Walmart uses the report to obtain credit facilities from banks, or extend loan and credit terms. Banks and other credit facilities may request financial statements and reports from independent accounting reports to ascertain the correctness of the financial statements.
References
Kral, R. (2017). Management’s Annual Report on ICFR. Corporate Compliance Insights. Retrieved 29 May 2020, from https://www.corporatecomplianceinsights.com/managements-annual-report-on-icfr/.
Munter, H. (2015). Importance of Audits of Internal Controls. Pcaobus.org. Retrieved 29 May 2020, from https://pcaobus.org/News/Speech/Pages/Munter-Audits-Internal-Control-
Rudhani, L. H., Ismajli, H., & Mustafa, A. (2017). The Importance of Audited Financial Statement in Attracting Foreign Investors in Private Sector in Kosovo. Baltic Journal of Real Estate Economics and Construction Management, 5(1), 118-136.
United States Securities and Exchange Commission form 10-K for Walmart Inc. for the fiscal year ending 31st Jan, 2019 https://www.sec.gov/Archives/edgar/data/104169/000010416919000016/wmtform10-kx1312019.htm#sC5EF4C3DF7805DF6890D6BE15C9C0700