Limited scope review or audit

Limited scope audit

Limited scope audits will test only the most critical parts of each accounting department.  Auditors may review check signing authority and the approval process in accounts payable, accounting posting in accounts receivable and cash reconciliation in the general accounting department. These accounting functions deal mostly with cash disbursements and collections, which are notorious for fraud and embezzlement schemes by employees. Other critical department functions may be audited as well, but with strict limits on how many specific accounting functions in each department.  Other accounting functions tested in a limited scope audit may include sales orders, fixed assets, depreciation, or payroll liabilities.

During a limited scope audit, the financial transaction sample size is reduced to meet the time constraints of the limited scope audit. We will usually select a specific accounting period to audit, choosing a random set of transaction to review during the audit.  Sample sizes are usually agreed upon between the CPA firm and their client company prior to the beginning of the audit.


Agreed-upon procedures review

An agreed-upon procedures engagement is not an audit but an engagement in which we apply our independent, third party expertise to financial data. The beauty of an agreed upon procedures engagement (AUP) is that it enables you, the client, to determine the type and extent of procedures to be performed. Our report will not result in an opinion on the financial data but will be a detailed account of the exact procedures we performed and the specific results of those procedures.
For example, if you have a concern about the amount and procedures surrounding your payroll, we can perform an evaluation of the relationship between amounts actually paid to your employees and the rates set forth in their personnel files. We can test a sample of transactions to look for the checks and balances you have put in place; you can even tell us how many you want us to observe.
The only limitation on an AUP is that both you and Kuang Zheng CPAs agree to the procedures to be performed. You have the ability to specifically address the areas for which you have concern and can avoid the cost of testing those areas with which you feel comfortable.