a.

The classes of transactions in the entity's operations that are significant to the financial
statements.

b. The procedures within both IT and manual systems by which those transactions are initiated,
authorized, recorded, processed, corrected as necessary, transferred to the general ledger, and
reported in the financial statements.

c. The related accounting records supporting information and specific accounts in the financial
statements that are used to initiate, authorize, record, process, and report transactions. This
includes the correction of incorrect information and how information is transferred to the general
ledger. The records may be in either manual or electronic form.

d. How the information system captures events and conditions, other than transactions, that are
significant to the financial statements.

e. The financial reporting process used to prepare the entity's financial statements, including
significant accounting estimates and disclosures.

f. Controls surrounding journal entries, including nonstandard journal entries used to record
nonrecurring, unusual transactions, or adjustments. This understanding of the information system
relevant to financial reporting should include relevant aspects of that system relating to information
disclosed in the financial statements that is obtained from within or outside of the general and
subsidiary ledgers.

g. The auditor should obtain an understanding of how the entity communicates financial reporting
roles and responsibilities and significant matters relating to financial reporting, including a.
communications between management and those charged with governance and b. external
communications, such as those with regulatory authorities.

h. control activities relevant to the audit. The auditor should obtain an understanding of control
activities relevant to the audit, which are those control activities the auditor judges it necessary to
understand in order to assess the risks of material misstatement at the assertion level and design
further audit procedures responsive to assessed risks. An audit does not require an understanding of
all the control activities related to each significant class of transactions, account balance, and
disclosure in the financial statements or to every assertion relevant to them. However, the auditor
should obtain an understanding of the process of reconciling detailed records to the general ledger
for material account balances
Leadership Skills of James Sinegal

A leader must have some skills which distinct himself/herself from the fellow members. It’s the skills
that help to implement a leader’s goal. And here’re some leadership skills of James Sinegal.

Good Communication

James Sinegal always kept information, no matter how small the issue is. He even answered his own
phone call, also though he was the CEO of Costco Wholesale. He makes sure that the workers and
employees always get a clear message about the company’s future plan and strategies and the
reason behind his steps.

Situation Analysis

Sinegal took every decision after analyzing the situation carefully, no matter how much backlashes
he received. Costco didn’t have health-care premiums for nine years! He was quite criticized for this
situation, but he only did that to balance the operation’s rising cost. Although later, he changed his
mind and gave the benefits his employees deserve. And Costco’s employee turnover is the lowest
than other retail companies only because of James.

Efficiency

Costco Wholesale doesn’t have a broad product range like other retail companies. But still, its
customer base is growing day by day. Costco also doesn’t do any traditional marketing. Because
James believes they have scarce resources, but they have to make the best out of it. With his
efficiency skill, Sinegal showed the world how a proper direction and strategic mind could be a game
change even with scarce resources.