Principles of Auditing

Final Project Report

Name: Alishba Khan

Roll no: 2022-B.com-006

Department: Commerce

Semester: 5

Submitted to: Dr Afkar

Date: 19, December, 2024

 AMAZOM COMPANY

Amazon Overview
Amazon.com, Inc. is a global leader in technology, e-commerce, and cloud computing,
founded by Jeff Bezos in 1994 in Seattle, Washington. What began as an online bookstore
quickly grew into one of the world’s largest and most diversified businesess Today, Amazon
operates in a variety of industries, including retail, cloud computing, digital streaming,
artificial intelligence, and logistics, with a strong emphasis on innovation and customer-
.centric operations

Business Model and Services

Amazon’s work model is centered around automation, data analytics, and machine learning to
streamline operations and improve the customer experience. Its vast e-commerce platform
serves millions of customers across the globe, offering a wide range of products from
electronics and apparel to groceries and books. Amazon’s business model focuses on offering
a comprehensive selection, fast delivery services, competitive pricing, and customer
.convenience

E-Commerce: Amazon has revolutionized retail with its large product selection and efficient
.fulfillment system

Cloud Computing: Amazon Web Services (AWS) provides scalable, on-demand computing
.services to businesses worldwide, making AWS a significant revenue driver

Streaming Services: Amazon Prime Video offers digital streaming of movies, TV shows,
.and exclusive content

Artificial Intelligence: The company uses AI technologies in various products, such as

.Alexa, and in its warehouses for automation

Global Reach and Operations

Amazon operates in several regions, with branches and fulfillment centers in North America,
:Europe, Asia, and South America. Notable international ventures include

Global E-Commerce Expansion: Amazon serves customers in multiple countries, providing

.localized services

Amazon Prime: Expanding globally, Amazon Prime offers benefits like fast shipping and
.access to streaming services in countries like India and Japan

Amazon Fulfillment Centers: Amazon’s efficient fulfillment network includes warehouses

.and stores worldwide, enabling quick order delivery

Innovation and Technology

Amazon is known for its forward-thinking approach and continuous investment in new
:technologies

Automation: Amazon uses robotics and machine learning to streamline its warehouse
.operations and order fulfillment

Sustainable Practices: The company is committed to sustainability, aiming to achieve net-

.zero carbon emissions by 2040

Emerging Technologies: Amazon is also exploring drone delivery, autonomous vehicles,

.and smart home devices, pushing the boundaries of innovation

Founders and Leadership

Amazon was founded by Jeff Bezos, who served as the CEO until 2021. Under his
leadership, Amazon transformed from a small online bookstore into a global powerhouse in
technology and retail. After Bezos's transition, Andy Jassy became the CEO, leading Amazon
.into its next phase of growth and innovation

It is the second-largest private employer in the United States and the second-largest company
in the World and in the U.S. by revenue as of 2024. As of October 2024, Amazon is the 12th-
most visited website in the world and 84% of its traffic comes from the United
States. Amazon is also the global leader in research and development spending, with R&D
.expenditure of US$73 billion in 2022

DIRECTORS IN AMAZON

In accordance with our laws, the Board has fixed the number of directors constituting the
Board at twelve, as of the Annual Meeting. Twelve nominees be elected at the Annual
Meeting, each of whom will hold office until the next Annual Meeting of Shareholders or
:until his or her successor shall have been elected and qualified. Sggome are as follow

) Jeffrey P. Bezos Executive Chair •

Jeff Bezos founded Amazon.com in 1994. Amazon’s mission is to be Earth's most customer-
centric company. Bezos is also the founder of aerospace company Blue Origin, which is
working to lower the cost and increase the safety of spaceflight, and he is owner of the
.Washington Post

Andrew R. Jessy (President and chief Executive officer)

Andy Jassy is President and CEO of Amazon.com and also serves on the Board of Directors.
He founded and led Amazon Web Services (AWS) from its inception and served as its CEO
from April 2016 until July 2021. He joined Amazon in 1997 and, prior to founding AWS,
held various leadership roles across the company, including both business-to-business and
business-to-consumer. He has an AB from Harvard University and an MBA from Harvard
.Business School
 Keith B. Alexander (President and chief Executive officer) •

General (Ret.) Alexander has been a director since September 2020. Gen. Alexander was
Chief Executive Officer and President of IronNet, Inc. Gen. Alexander served as a director of
.CSRA, Inc. from November 2015 to April 2018

Chair of the Security Committee

Jamie S. Gorelick ( Women) •

Jamie S. Gorelick has been a director since February 2012. Ms. Gorelick has been a partner
with the law firm Wilmer Cutler Pickering Hale and Dorr LLP since July 2003. She was one
of the founding supporters and a long-time board member of the Washington Legal Clinic for
.the Homeless and served on the board of the National Women’s Law Center

Daniel P. Huttenlocher •

Mr. Huttenlocher has served as a director of Corning Incorporated since February 2015. Mr.
Huttenlocher also served on the board of the John D. and Catherine T. MacArthur Foundation
.from 2010 to 2022, including as its chair from 2018 to 2022

Andrew Y. Ng •

Andrew Ng has been a director since April 2024. Dr. Ng has served as Managing General
Partner of AI Fund, a venture studio that supports entrepreneurs in building AI companies
.since January 2018

.Member of the Leadership Development and Compensation Committee

Indra K. Nooyi (Women) •

Indra K. Nooyi has been a director since February 2019. Mrs. Nooyi was the Chief Executive
Officer of PepsiCo, Inc., a multinational food, snack, and beverage company, from October
2006 to October 2018, where she also served as the Chair of its board of directors from May
.2007 to February 2019

Chair of the Audit Committee

Jonathan J. Rubinstein •

Jonathan J. Rubinstein has been a director since December 2010. Rubinstein was Chief
Executive Officer and President of Palm, Inc., a smartphone manufacturer, from June 2009
.until 2010

Chair of the Nominating and Corporate Governance Committee

Brad D. Smith •
Brad Smith has been a director since September 2023. Mr. Smith has served as President of
Marshall University since January 2022. Mr. Smith served as Executive Chair of Intuit Inc., a
business software company, from January 2019 to January 2022

Patricia Q. Stonesifer (Women) •

Patricia Q. Stonesifer has been a director since February 1997. Ms. Stonesifer served as the
.interim Chief Executive Officer of the Washington Post from June 2023 to January 2024

Member of the Nominating and Corporate Governance Committee

.Wendell P. Weeks •

Wendell P. Weeks has been a director since February 2016. He also currently serves on the
Board of Trustees for the Institute for Advanced Study and is a member of the Liveris
Academy Honorary Board. He also served as a director of Merck & Co., Inc. from February
.2004 to May 2020

Member of the Audit Committee

Each of the nominees is currently a director of Amazon.com, Inc. and has been elected to
hold office until the 2024 Annual Meeting or until his or her successor has been elected and
qualified. Our director nominees reflect our commitment to diversity, with four women and
.three directors from underrepresented racial/ethnic groups

Audit Committee (Definition)

An audit committee is a key subcommittee of a company's board of directors responsible for "
overseeing the financial reporting process, internal controls, and the audit of financial
statements. It ensures that the company’s financial reports are accurate and comply with
relevant accounting standards. The committee also monitors the effectiveness of internal
controls and risk management processes, communicates with external auditors to ensure the
quality and integrity of audits, and ensures compliance with legal and regulatory
requirements. Typically, the audit committee is composed of independent, non-executive
directors with expertise in accounting or finance, to provide unbiased oversight and
".strengthen corporate governance

Audit Committee Amazon

The Audit Committee represents and assists the Board in fulfilling its oversight responsibility
relating to our financial statements and financial reporting process, assessment of risks
related to business continuity and operational risks, the qualifications, independence, and
performance of our independent auditors, the performance of our internal audit function, legal
and regulatory matters, our compliance policies and procedures, tax planning and
compliance, and policies, procedures, and reports on political contributions and lobbying
expenses. The Board has designated each of Messrs. Smith and Weeks and Mrs. Nooyi as an
Audit Committee Financial Expert, as defined by Securities and Exchange Commission
.(“SEC”) rules

Purpose of Committee
The Committee assists the Board of Directors in fulfilling its oversight responsibility relating
:to

;The Company's financial statements and financial reporting process

;The qualifications, independence and performance of the Company's independent auditors

The performance of the Company's internal audit function; and

.The Company's compliance with legal and regulatory requirements

In so doing, the Committee maintains free and open communication with the Company's
.independent auditors, internal audit department and management

Duties and Responsibilities

Among its specific duties and responsibilities, the Committee performs the following, to the
extent it deems necessary and appropriate, consistent with and subject to applicable laws, as
:well as rules and regulations promulgated by the SEC, Nasdaq or other regulatory authorities

Financial Statements and Financial Reporting Process

Annual and Quarterly Financial Reporting: The Committee reviews and discusses with
management and the independent auditors the annual audited and quarterly unaudited
financial statements and related disclosures included in the Company's quarterly earnings
releases and in the Company's periodic reports on Form 10-K and 10-Q (including the
."Management's Discussion and Analysis" section and officer certifications)

Annual Audit and Communications with Independent Auditors: The Committee reviews and
discusses the scope and results of the independent auditors' annual audit and quarterly
reviews of the Company's financial statements, and any other matters required to be
.communicated to the Committee by the independent auditors

Disclosure, Accounting and Financial Controls: The Committee discusses with management,
the senior internal audit executive and the independent auditors the adequacy and
effectiveness of the Company's disclosure controls and procedures, the adequacy and
effectiveness of the Company's internal control over financial reporting, and the Company's
risk assessment and risk management policies, including business continuity and operational
.risks

Qualifications, Independence and Performance of the Independent Auditors

Appointment, Compensation, Retention and Oversight: The independent auditors report

directly to the Committee, which is directly responsible for the appointment, compensation,
retention and oversight of the work of the independent auditors. The Company will provide
appropriate funding, as determined by the Committee, for payment of compensation to the
.independent auditors

Independence: The Committee considers the independence of the auditors as required by law
or regulation. The Committee obtains and reviews a report by the independent auditors
describing any relationships between (i) the independent auditors or their affiliates, and (ii)
the Company or individuals in financial reporting oversight roles in the Company, that may
reasonably be thought to bear on the independence of the auditors, and discusses with the
.auditors the potential effects of any disclosed relationships on the auditors' independence

Approval of Audit and Permitted Non-Audit Services: To the extent required by law or
regulation, the Committee reviews and approves in advance all audit and permitted non-audit
services to be provided by the independent auditors and establishes related policies and
.procedures

Hiring Former Employees of Independent Auditors: The Committee establishes policies for
.the Company's hiring of employees and former employees of the independent auditors

Performance of the Internal Audit Function

Internal Audits and Reports: The Committee reviews and discusses with the Company's
senior internal audit executive the overall scope and staffing of the Company's internal audits.
.The Committee reviews all significant internal audit reports and management's responses

Senior Internal Audit Executive: The Committee reviews the appointment of individuals to,
.and any changes in, the senior internal audit position

Legal, Regulatory, and Compliance Oversight

Legal, Regulatory, and Compliance: The Committee oversees legal and regulatory matters
that may have a material impact on the Company's financial statements and the Company’s
Code of Business Conduct and Ethics (other than with respect to workplace discrimination
and harassment). The Committee periodically reviews the Company's compliance policies
and procedures, and receives and reviews certain reports on complaints, allegations, and
incidents reported pursuant to the Code of Business Conduct and Ethics or through the
.Company’s other hotlines and procedures

Tax: The Committee reviews and discusses with management the Company’s tax planning
.and compliance

Government Relations: The Committee annually reviews and discusses with management
the Company’s policies, procedures, and reports on political contributions and lobbying
.expenses, including donations to trade associations and social welfare organizations

Other Duties
Complaints: The Committee establishes and oversees procedures for the receipt, retention
and treatment of complaints received by the Company regarding accounting, internal
accounting controls, auditing, and federal securities law matters and for the confidential,
anonymous submission by the Company's employees of concerns regarding questionable
.accounting, auditing, and federal securities law matters

Outside Advisors: The Committee is empowered to investigate any matter brought to its
attention and has the authority to engage outside counsel and other advisors as it deems
necessary to carry out its duties. The Company will provide for appropriate funding, as
determined by the Committee, for payment of compensation to such counsel and other
.advisors

Related Person Transactions: The Committee reviews and approves related-person

.transactions as defined by SEC rules

Meeting

The Committee meets at least four times a year, either in person or telephonically, at such
times and places as the Committee determines. The Committee periodically meets separately
in executive session with the senior internal audit executive, management and the
independent auditors. The Committee reports regularly to the full Board of Directors with
.respect to its activities

APPOINTMENT OF INDEPENDENT AUDITORS (December 31, 2024)

The Audit Committee is responsible for the appointment, compensation, retention, and
oversight of our independent auditors under SEC and Nasdaq regulations. The Committee has
appointed Ernst & Young LLP (E&Y) to serve as the independent auditors for the fiscal year
ending December 31, 2024, and is seeking shareholder ratification of this appointment. E&Y
has served as our independent auditor since 1996. In making this decision, the Audit
Committee considered several factors, including the firm’s long tenure, professional
qualifications, past performance, resources, and ability to manage the complexity of our
business, as well as the potential impact of changing auditors. The Board and Audit
Committee believe retaining E&Y is in the best interests of the Company and its
shareholders. If shareholders do not ratify the appointment, the Audit Committee will
evaluate the vote when selecting auditors for the 2025 fiscal year. Even if ratified, the
Committee may periodically seek proposals from other firms and may select E&Y or another
.firm as the Company’s independent auditors

:Currently Auditing Firm

Ernst & Young LLP Consent of Ernst & Young LLP, Independent Auditors. Certification of
Jeffrey P. Bezos, Chairman and Chief Executive Officer of Amazon.com, Inc., Pursuant to 18
.U.S.C. Section 1350

AUDITORS
Representatives of E&Y are expected to participate in the Annual Meeting and will have an
.opportunity to make a statement and respond to appropriate questions from shareholders

Fee Information

The table below sets forth the aggregate audit fees billed and expected to be billed by E&Y
for the indicated fiscal year and the fees billed and expected to be billed by E&Y for all other
: services rendered during the indicated fiscal year: As a Example

Fiscal 2023 Fiscal 2022

Audit fee $37,387,000 $33,840,000
Audit Related fee 9,403,000 8,022,000
Tax fee 0 0
All other fee 175,000 0
total 46,965,000 41,862,000

Audit Fees

Audit fees include the aggregate fees for the audit of our annual consolidated financial
statements and internal controls, and the reviews of each of the quarterly consolidated
financial statements included in our Forms 10-Q. These fees also include statutory and other
.audit work performed with respect to certain of our subsidiaries

Audit-Related

Fees Audit-related fees include accounting advisory services related to the accounting
treatment of transactions or events, including acquisitions, and to the adoption of new
accounting standards, as well as additional procedures related to accounting records
performed to comply with regulatory reporting requirements and providing certain attest
.reports, including for sustainability reporting

Pre-Approval Policies and Procedures

All fees were approved by the Audit Committee, which oversees audit fee negotiations with
E&Y for the annual financial statement and internal control audit. The Committee has a pre-
approval policy requiring advance approval for all audit and non-audit services. The
Committee ensures that non-audit services comply with SEC rules on auditor independence.
Certain audit and non-audit services have been pre-approved for up to 18 months, or another
specified period. Any additional services require management’s request for pre-approval. The
Committee has delegated pre-approval authority to its members, who must report decisions at
.the next meeting

Amazon Audit Committee Report

The Audit Committee is composed solely of independent directors who meet Nasdaq’s
requirements. The Committee reviews the Company’s financial reporting process on behalf
of the Board. While management is responsible for establishing and maintaining internal
controls and preparing financial statements, the Committee’s role is to oversee this process
.without duplicating the work of management or the independent auditors

For the year ended December 31, 2023, the Committee reviewed the Audited Financial
Statements, management’s assessment of internal controls, and the independent auditors’
evaluation of internal control effectiveness. The Committee discussed with Ernst & Young
LLP, the Company’s independent auditors, the matters required by the Public Company
Accounting Oversight Board (PCAOB) and the SEC, and received the auditors’
.independence disclosures

Based on these reviews and discussions, the Audit Committee recommended to the Board
that the Audited Financial Statements be included in the Company’s Annual Report on Form
.10-K for filing with the SEC

.Strategic Audit of Amazon.com, Inc

Situational Analysis
Goals and Evaluation Criteria

Amazon’s primary goal is maintaining its vast customer base and growing profits. While
profitability is not a concern, the focus should now shift toward improving its public image.
The following analysis uses Porter’s Five Forces and a SWOT analysis to assess the
.company’s strategic position

SWOT Analysis
Strengths

Convenience: Amazon offers a one-stop-shop for almost any product, with fast delivery,
.making it the first choice for many consumers

Brand Recognition: With nearly half of the U.S. ecommerce market share, Amazon is a
.household name. Customers trust Amazon more than lesser-known ecommerce sites

Weaknesses

Spread Too Thin: Amazon’s diversification strategy, while successful, has sometimes led to
.poorly received products (e.g., Amazon Fire Phone)

Physical Presence: Despite dominating ecommerce, Amazon has a small share of overall
retail sales, especially in areas like clothing, where physical stores are preferred by
.customers

Opportunities

Foreign Markets: Amazon’s market share in countries like China is minimal, offering huge
.untapped potential
Threats

.Counterfeit Sales: Fraudulent third-party sellers pose a risk to Amazon’s credibility

Lawsuits: Multiple lawsuits regarding labor issues and unsafe working conditions are
draining resources and harming Amazon’s public image.Strategy Alternatives

Open Physical Stores: Addressing the demand for in-person shopping, especially for items
.like clothing, could help Amazon capture more of the retail market

Improve Worker Conditions: Enhancing warehouse conditions and worker benefits would
.improve Amazon’s reputation and reduce lawsuits

Better Vendor Vetting: Implementing stricter checks on third-party sellers would reduce
.fraud and improve customer trust

Offer Multiple Clothing Sizes: Allowing customers to try on multiple clothing sizes before
.purchasing could reduce hesitation about buying apparel online

Strategy Recommendations
:Based on the analysis, the following strategies are recommended

Improve Worker Conditions: Addressing the significant public backlash and legal
challenges related to warehouse working conditions will not directly impact profits but will
.enhance Amazon’s reputation, reduce lawsuits, and improve employee satisfaction

Better Vendor Vetting: Strengthening the verification process for third-party sellers will
.prevent scams, ensuring that Amazon customers receive high-quality, reliable products

Send Multiple Sizes of Clothes with Purchases: This strategy can ease customer concerns
about purchasing clothing online, without the need for costly physical stores. Customers can
.try on several sizes and return the unwanted items, increasing satisfaction and sales

Ernst & Young LLP (EY), Audit Firm Use Tools for Auditing Amazon Company

Ernst & Young LLP (EY) uses several specialized tools and technologies in its auditing
process. Based on industry standards and EY's own innovations, here are three main tools
:that are commonly used by large audit firms like EY

EY Helix .1

:Overview
EY Helix is an advanced suite of data analytics tools designed to transform the audit process.
It integrates artificial intelligence (AI) and machine learning to process large volumes of
financial data efficiently. For a company like Amazon, with complex transactions and
massive amounts of data from various business units (e.g., e-commerce, AWS, digital
.advertising), Helix is invaluable in helping auditors perform data-driven audits
:Key Features

Data Analytics: Helix processes large datasets to provide insights and identify patterns,
.trends, and anomalies that would otherwise be difficult to detect

Risk Identification: The tool helps auditors detect areas of potential risk, fraud, or financial
.misstatement. It highlights irregularities or discrepancies in financial records

Continuous Monitoring: EY Helix allows for real-time monitoring of financial transactions

.and processes, ensuring ongoing compliance and reducing the risk of oversight

Automated Data Processing: The tool automatically extracts, sorts, and analyzes data from
Amazon’s various financial systems (e.g., e-commerce platform, cloud services). This
.reduces the manual effort involved in auditing and allows for a more thorough review

Efficiency: Helix enhances the speed and accuracy of the audit process by minimizing
human errors and automating repetitive tasks. This is crucial when auditing Amazon,
.considering the volume of transactions and complexity of financial operations

:How it helps in Amazon’s Audit

Amazon’s global operations and massive data require sophisticated tools like EY Helix for
efficient auditing. By automating analysis and detecting risks early, Helix ensures that
.Amazon’s financial statements are accurate and compliant with international standards

EY Canvas .2

:Overview
EY Canvas is a cloud-based audit management platform designed to streamline the audit
workflow. It enables auditors to collaborate efficiently across geographies and audit teams,
making it an ideal tool for auditing global companies like Amazon. With cloud integration,
the tool allows real-time access to audit data, ensuring that all stakeholders are aligned
.throughout the audit process

:Key Features

Centralized Platform: Canvas serves as a centralized platform where all audit-related data,
documents, and workflows are stored. This enhances collaboration between EY’s audit
.teams, whether they are working on Amazon’s financial audit in the U.S., Europe, or Asia

Collaboration and Communication: It facilitates real-time communication and sharing of

audit information between EY teams and Amazon's finance team, reducing
.miscommunication and delays

Automated Workflows: Canvas automates routine audit tasks, such as document

management, testing, and issue tracking. This helps auditors stay organized and focused on
.more complex tasks
Risk Assessment and Documentation: The platform allows auditors to assess risk,
document audit findings, and generate reports automatically, ensuring consistency and
.accuracy in the audit process

Security and Compliance: As a cloud-based tool, EY Canvas ensures that audit data is
secure and compliant with regulatory standards, including Sarbanes-Oxley (SOX)
.requirements and the General Data Protection Regulation (GDPR)

:How it helps in Amazon’s Audit

EY Canvas enables Amazon’s financial audit teams to seamlessly manage their audit tasks.
The tool’s cloud-based structure allows auditors to access Amazon’s financial data remotely,
ensuring that even if auditors are working in different locations, they can collaborate
effectively. This is particularly useful for a global company like Amazon with financial data
.spread across multiple jurisdictions

CaseWare IDEA .3

:Overview
CaseWare IDEA is a leading data analysis tool used by auditors to perform sophisticated
analysis on financial data. IDEA is specifically designed for auditors to detect fraud, errors,
.and financial misstatements by performing detailed data extraction and analysis

:Key Features

Data Extraction: IDEA allows auditors to extract data from various sources, including
financial systems, spreadsheets, and databases. This is crucial for a company like Amazon,
.which uses numerous software and platforms to manage its operations

Testing and Sampling: Auditors can perform tests on large datasets to identify trends,
anomalies, or outliers in financial transactions. This is helpful in detecting fraud or errors in
.areas such as revenue recognition, inventory valuation, or tax compliance

Advanced Analytics: The tool uses powerful algorithms to analyze data, providing insights
into trends and potential risk areas. For instance, auditors can analyze Amazon’s transactional
.data for signs of irregularities or unusual patterns in revenue or expense items

Visualization and Reporting: IDEA provides tools to visualize data, which makes it easier for
auditors to interpret findings and communicate issues with Amazon’s management. It also
.generates audit reports that are essential for compliance and regulatory purposes

Automation: Like EY Helix, IDEA automates repetitive tasks such as data collection,
.analysis, and reporting, improving the efficiency and consistency of the audit

:How it helps in Amazon’s Audit

For Amazon, IDEA’s data analysis capabilities are particularly valuable in ensuring the
integrity of financial records. Given the company’s large, complex datasets, IDEA allows
EY’s auditors to process and analyze data quickly and efficiently, ensuring that Amazon’s
.financial statements accurately reflect the company’s true financial position

IDEA can also be used to monitor compliance with IFRS and GAAP, as well as to detect any
.discrepancies that may require further investigation

Amazon Audit Engagement Letter

: Scope of Work

Includes financial statement audits, internal controls assessment, and compliance with
.regulations like SOX (Sarbanes-Oxley Act)

Covers key areas such as e-commerce operations, cloud computing revenue (AWS), logistics,
.and inventory systems

: Objective of the Audit

To provide an independent opinion on the accuracy and fairness of Amazon’s financial

.statements in accordance with GAAP or IFRS

: Roles and Responsibilities

Management’s responsibility: Preparing financial statements, maintaining internal controls,

.and ensuring compliance

.Auditor’s responsibility: Providing an unbiased opinion on the financial statements

: Materiality

Outlines thresholds for materiality, considering Amazon's large-scale and complex

.transactions

: Audit Timeline

Specifies deadlines for audit procedures, interim reviews, meetings with management, and
.final reporting

: Deliverables

.Includes formal audit reports for the Board of Directors and the Audit Committee

: Access to Information

Grants auditors access to Amazon’s records, management, facilities, warehouses, and systems
.(e.g., AWS, supply chain management data)

: Regulatory Requirements

.Ensures compliance with SOX, Basel III, and other relevant jurisdiction-specific standards
: Confidentiality Clause

.Ensures sensitive financial and operational information remains confidential

: Independence and Conflict of Interest

Confirms the audit firm’s independence and absence of conflicts with Amazon or its
.affiliates

: Fees and Billing

.Details the basis for calculating audit fees, considering Amazon's size and complexity

: Liability Limitations

.Defines the auditor’s liability and responsibilities to mitigate excessive claims

: Audit Committee Communication

Establishes regular communication and reporting to Amazon’s Audit Committee regarding

.findings, risks, and concerns

Amazon Internal auditors roles and responsibilities

Our Internal Audit team is responsible for helping protect Amazon’s businesses and
customers globally. We provide an independent and objective assessment of risk and work
with senior leaders across the company to drive continuous improvements that directly help
our customers. We analyze business practices, processes, and technology to find current or
potential issues, and then we work closely with business leaders to address those gaps with
.sustainable solutions

Senior Internal Auditor

. Help with the Internal Audit risk assessment and audit planning process

 Plan and organize audit or advisory projects, carry out project plans, write detailed
.findings, and assist in creating business responses and action steps

 Look closely at the details to find important issues and recommend solutions that address
.the root cause of problems

 Work with multiple stakeholders to agree on the best solutions and ensure that risks are
.properly managed

 Prepare reports that you will present to senior management and use for reporting to the
.Audit Committee

 Represent the Internal Audit team in various meetings (e.g., with stakeholders,
.management, the board, and compliance committees)
 Create documents to respond to requests from internal or external parties related to Internal
.Audit

IT Audit Manager, Defensive Secuirty Team

Work across a wide variety of FinOps teams to assess internal controls though conducting
.internal audits and reviews

Track audit remediation actions, participate in FinOps service and operation team meetings to
.develop solutions, and report on the status

.Interact with FinOps business to establish best practices

Conduct internal audits to proactively identify internal control deficiencies, root causes, and
.recommend improvements

Assist with providing internal control subject matter expertise for new policies, standard
.operating procedures, or tools being developed

Senior Manager, Internal Audit, Worldwide Amazon Stores

Risk Assessment

Project Management

Produce high quality reports

People leadership

Amazon External Auditor roles and responsibility

 Identify and recommend solutions for various internal problems to ensure operational and
.financial efficiency

. Improve corporate governance structures by working with audit committees

 Address issues such as asymmetric information, transparency, and proper information

.disclosure between corporate managers and shareholders

. Mitigate factors contributing to insider trading and promote fair business practices

 Ensure accurate financial reporting and improve transparency between corporate managers
.and shareholders

 Examine the effect of banking regulations like Basel III capital requirements on risk
.management and financial reporting

. Analyze ownership structures and their effect on corporate governance and risk-taking

 Apply relevant theories such as Banking Theory and Corporate Governance Theory to
.strengthen governance
 Help implement strategies to control risk, aligned with developments in Finance Theory
.and global regulations

 Ensure corporate managers act in the best interest of shareholders, preventing self-serving
.behaviors

 Work closely with the audit committee to act as a vital and complementary tool for
.corporate governance

 Highlight measures needed to maximize the external auditor’s role in strengthening

.corporate governance

 Analyze governance models from various jurisdictions to provide insights for tailoring
.effective governance mechanisms

 Help Amazon build a strong governance structure that ensures financial transparency,
.reduces risk, and maximizes shareholder value

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

.Amazon.com, Inc

Opinion on Internal Control Over Financial Reporting

We have audited Amazon.com, Inc.’s internal control over financial reporting as of

December 31, 2023, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) (the COSO criteria). In our opinion, Amazon.com, Inc. (the Company)
maintained, in all material respects, effective internal control over financial reporting as of
.December 31, 2023, based on the COSO criteria

We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company
as of December 31, 2023 and 2022, the related consolidated statements of operations,
comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years
in the period ended December 31, 2023 and the related notes and our report dated February 1,
.2024 expressed an unqualified opinion thereon

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of
.the Securities and Exchange Commission and the PCAOB

We conducted our audit in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether
.effective internal control over financial reporting was maintained in all material respects

Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit
.provides a reasonable basis for our opinion

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and
procedures that

pertain to the maintenance of records that, in reasonable detail, accurately and fairly )1(
;reflect the transactions and dispositions of the assets of the company

provide reasonable assurance that transactions are recorded as necessary to permit )2(
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and

provide reasonable assurance regarding prevention or timely detection of unauthorized )3(

acquisition, use, or disposition of the company’s assets that could have a material effect on
.the financial statements

The information provided for 2017 and 2023 regarding Amazon's internal control over
financial reporting is very similar in structure and wording, with the same general principles
:and conclusions. The key points of similarity include

:Audit Opinion

Both reports express an opinion that Amazon maintained effective internal control over
.financial reporting as of December 31st, based on the COSO framework

:Audit Basis

Both reports emphasize the responsibility of Amazon's management for maintaining effective
internal controls, and the responsibility of the auditor to express an opinion based on their
audit, which was conducted in accordance with the Public Company Accounting Oversight
.Board (PCAOB) standards
:Audit Procedures

Both reports outline the auditing procedures, including obtaining an understanding of internal
controls, assessing risks, testing the design and operating effectiveness, and evaluating
.internal controls

:Limitations of Internal Control

Both reports highlight the inherent limitations of internal control over financial reporting,
such as the risk of misstatements not being prevented or detected, and the possibility of
.controls becoming inadequate due to changes in conditions

:Differences

:The main differences between the two reports are

:Dates

The 2023 report refers to the audit of financial reporting as of December 31, 2023, while the
.2017 report refers to December 31, 2017

The 2023 report was dated February 1, 2024, and the 2017 report was dated February 1,
.2018

:Period Coverage

The 2023 report covers the consolidated balance sheets of 2023 and 2022, while the 2017
.report covers the consolidated balance sheets of 2017 and 2016

Amazon Adopt two Classification of Audit

Audit on the Basis of Function

This refers to categorizing audits based on the specific functions or areas they focus on within
:the organization. The main types of audits here are Internal Audit and External Audit

Internal Audit: Conducted by employees within the company to assess the effectiveness of
.internal controls, risk management, and the overall efficiency of operations

External Audit: Conducted by an independent external auditor to evaluate the financial

.statements and ensure compliance with accounting standards and regulations

Audit on the Basis of Audit Dimension

This refers to categorizing audits based on the areas of focus or subject matter. These audits
:typically cover specific aspects such as

Tax Audit: Reviews the company’s tax filings to ensure compliance with tax laws and
.regulations
Management Audit: Assesses the effectiveness of management in running the organization,
.focusing on decision-making, leadership, and strategic planning

Compliance Audit: Ensures the company complies with relevant laws, regulations, and
.standards

Operational Audit: Reviews operational efficiency and effectiveness to identify areas of

.improvement

Audit Types on Amazon

Audits conducted on the Amazon Marketplace are a complex process of data extraction and
phenomena occurring in sales and advertising accounts, product cards, rankings, search
'engine, categories and subcategories, and then drawing conclusions

Amazon Account Audit: External vs. Internal

The distinction between external and internal audits arises from the methods used and the
.type of data available during implementation

External Audit: This approach is less comprehensive in verifying elements such as sales
accounts, product cards, brand positioning, advertising, logistics, and competition. It relies on
publicly available information from sources like the Amazon platform itself (storefront,
product cards, A+ Content, Bestseller Ranks), as well as third-party tools such as Helium10,
Keepa, Amalyze, and JungleScout. Due to the lack of access to detailed sales account reports,
.external audits rely on indirect insights and general data from these platforms and tools

Internal Audit: This method provides more accurate and in-depth data, as it involves
accessing the seller's own account and historical company resources. Internal audits allow for
a deeper analysis of sales data, inventory, and performance metrics. However, it is limited to
the seller’s own account and does not provide insights into competitors. Despite this
limitation, internal audits are invaluable for developing action plans to optimize sales, as they
.provide the most accurate data available for decision-making

Specific audits of your Amazon account – conducted by area of operation

:There are the following types of specific Amazon audits

General audit. It consists in a cursory account audit from the point of view of the most
.important information in the areas of Seller Central, Case Log and Account Info

Health audit. It focuses on the “in minus” verification of the Account Health, Performance
.Notifications, Inventory, Return Rate, Case Log and Account Info sections

Content audit . It consists in verifying the level of optimization of published content in terms
.of views, SEO, conversion, brand consistency and attractiveness, and content saturation

Advertising audit. It analyzes the area of paid advertising in terms of the structure and types
.of campaigns, advertised products, keywords and numerical results
Logistics audit. It verifies the methods of delivering goods to end customers and external
.warehouses. It also verifies methods of their time and cost optimization

Audit of formalities. It allows you to verify both the compliance and validity of data on the
account. Moreover, it also allows you to check the validity of your documentation,
.certificates and permits to sell a specific range of products

Tax audit. It consists in checking the tax settlement structure in relation to the logistics
.methods used

Staff audit. It focuses on verifying the potential of the human resources to conduct and
.expand sales, as well as the possible need to use external entities

Sales potential audit. It is based on data on the sale of a specific group of products on the
target market. Based on the available resources, it allows you to anticipate the sales trend and
.the necessary expenses

?What do the results of an Amazon account audit reveal

Regardless of their type, each of the audits carried out brings results in at least one of the
:three areas

;factual status – allowing to establish the status quo as at the date of the audit

improvement – presenting recommendations for correcting errors and introducing

;improvements in the sales process

sales opportunities – showing the real potential of the company, the product range and the
.sales account itself on the marketplace

Amazon Company (2018) External Auditor Report / Opinion

Report of Independent Registered Public Accounting Firm
.To the Board of Directors and Shareholders of Amazon.com, Inc

Opinion on the Financial Statements

We have audited the consolidated balance sheets of Amazon.com, Inc. (the Company) as of
December 31, 2018, and 2017. We also audited the related consolidated statements of
operations, comprehensive income, stockholders' equity, and cash flows for the three years
ending December 31, 2018, along with the related notes (collectively called the “consolidated
.financial statements”)

In our opinion, the consolidated financial statements fairly present, in all material respects,
the financial position of the Company as of December 31, 2018, and 2017, and the results of
its operations and cash flows for the three years ending December 31, 2018. The financial
.statements are in line with U.S. generally accepted accounting principles (GAAP)
We also audited the Company's internal control over financial reporting as of December 31,
2018, based on the Internal Control – Integrated Framework (2013 framework) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our report
.on January 31, 2019, expressed an unqualified opinion on the Company's internal control

.We have served as the Company’s auditor since 1996

Seattle, Washington

Amazon Company (2023) External Auditor Report / Opinion

Report of Independent Registered Public Accounting Firm

.To the Board of Directors and Shareholders of Amazon.com, Inc

Opinion on the Financial Statements

We audited the consolidated balance sheets of Amazon.com, Inc. (the Company) as of
December 31, 2023, and 2022. This also includes the related consolidated statements of
operations, comprehensive income (loss), stockholders’ equity, and cash flows for the three
years ending December 31, 2023, as well as related notes (called “consolidated financial
.statements”)

In our opinion, the consolidated financial statements fairly show the Company’s financial
position at the end of December 31, 2023, and 2022, including its operations and cash flows
.over the three-year period, following U.S. generally accepted accounting principles (GAAP)

We also audited the Company’s internal control over financial reporting as of December 31,
2023, according to PCAOB standards. Based on criteria from Internal Control-Integrated
Framework (2013 framework) by COSO, our report on February 1, 2024, expressed an
.“unqualified opinion” (meaning no issues were found)

Basis for Opinion

These financial statements are the Company management’s responsibility. Our job is to give
an opinion on them through our audits. We are a registered accounting firm with PCAOB and
.are required to remain independent under U.S. federal laws and PCAOB rules

:We conducted our audits according to PCAOB standards. These standards require us to

Make a plan and carefully check the financial statements to ensure no big errors exist,
.whether from mistakes or fraud

.Look for areas where errors are more likely to happen and test those areas specifically

.Review evidence, test amounts, and check disclosures in the financial statements

Evaluate the accounting methods used, significant estimates made by management, and how
.the financial statements are presented

.We believe our audits give us a solid basis for our opinion
Critical Audit Matter
:The following “critical audit matter” came up during the audit. A critical matter is one that

Relates to important accounts or disclosures, and

.Requires us to use challenging, complex, or subjective judgment

.These matters do not change our overall opinion on the financial statements

Uncertain Tax Positions

:Description of the Matter

As explained in Notes 1 and 9, the Company operates in the U.S. and many other countries
:where tax positions can be uncertain. Management must use judgment to

Decide whether a tax position will likely be approved by tax authorities, and

.Measure the amount of tax benefit to recognize

.By December 31, 2023, Amazon reported $5.2 billion in tax liabilities

Auditing this was challenging because it involves complex judgments about tax laws, legal
.rulings, regulatory changes, and activities by tax authorities

:How We Addressed the Matter in Our Audit

:We tested the Company’s controls to assess its tax positions, including

,Whether a tax position is likely to be approved

How the tax benefit is measured over time, and

.The related disclosures

We used tax experts in international tax, transfer pricing, and R&D tax matters to evaluate
:Amazon’s positions. Depending on the tax position, we

,Reviewed the Company’s analysis and correspondence with tax authorities

,Checked the facts behind each tax position

,Applied our knowledge of tax laws to evaluate Amazon’s accounting

Analyzed the impact of recent court decisions and regulatory changes, and

.Reviewed the assumptions, calculations, and data used to determine tax benefits

.Finally, we checked whether the Company’s tax disclosures were appropriate

.We have served as the Company’s auditor since 1996

Seattle, Washington

February 1, 2024
:Personal Analysis

Comparison of Both External Report (2018 & 2023)

Aspect Auditor Opinion 2018 Auditor Opinion 2023

Audit Period December 31, 2018, and 2017 December 31, 2023, and
2022

Financial Consolidated balance sheets, Consolidated balance sheets,

Statements statements of operations, statements of operations,
Audited comprehensive income, comprehensive income
stockholders' equity, and cash flows (loss), stockholders' equity,
for three years ending December 31, and cash flows for three
2018 years ending December
31,2023

Audit Opinion Unqualified opinion (financial Unqualified opinion

on Financial statements fairly present the (financial statements fairly
Statements company’s financial position) present the company’s
financial position)

Internal Based on the COSO (2013) Based on COSO (2013)

Control Audit framework for internal control, with framework for internal
an unqualified opinion on internal control, with an unqualified
controls opinion on internal controls

Audit Standard PCAOB standards for auditing PCAOB standards for

auditing

Critical Audit None mentioned Critical audit matter:

Matters Uncertain Tax Positions due
to judgment in tax positions
and complexities in auditing
tax-related liabilities

Details on N/A Uncertain Tax Positions:

Critical Audit $5.2 billion in tax liabilities,
Matter requiring judgment and
evaluation of tax laws,
rulings, and authority
 activities

Audit Firm's Served as the auditor since 1996 Served as the auditor since
Experience 1996
with Amazon

Date of Report January 31, 2019 February 1, 2024

Audit Opinion Unqualified opinion based on COSO Unqualified opinion based

on Internal (2013) framework on COSO (2023) framework
Controls

Additional Standard audit procedures in line Included review of uncertain

Audit with PCAOB standards tax positions, use of tax
Procedures experts, and complex
evaluations of tax judgments

Personal Annalysis

Comparision Of Both Internal Report (2018 & 2023)

Audit Opinion 2017 Audit Opinion 2023 Aspect

Internal control over financial Internal control over financial Audit Subject
reporting as of December 31, .reporting as of December 31, 2023
.2017

Internal Control—Integrated Criteria Used

Framework issued by the Committee
of Sponsoring Organizations of the
Internal Control—Integrated Treadway Commission (2013
Framework issued by the .framework) (the COSO criteria)
Committee of Sponsoring
Organizations of the
Treadway Commission (2013
framework) (the COSO
.criteria)
Amazon maintained, in all Amazon maintained, in all material Audit Opinion
material respects, effective respects, effective internal control
internal control over financial over financial reporting as of
reporting as of December 31, December 31, 2023, based on the
2017, based on the COSO .COSO criteria
.criteria

.Report dated February 1, 2024 Report Date

Report dated February 1,

.2018

Management’s responsibility Management’s responsibility for Basis for Opinion

for maintaining internal maintaining internal control over
control over financial financial reporting. The audit was
reporting. The audit was conducted in accordance with PCAOB
conducted in accordance with .standards
.PCAOB standards

Conducted according to Conducted according to PCAOB Audit Standards

.PCAOB standards .standards

The audit included obtaining The audit included obtaining an Audit Procedures
an understanding of internal understanding of internal control,
control, assessing risks, and assessing risks, and evaluating the
evaluating the effectiveness of .effectiveness of internal control
.internal control

Internal control over financial Limitation of

reporting may not prevent or detect Internal Control
.misstatements
Internal control over financial
reporting may not prevent or
.detect misstatements
 Internal control is designed to Internal control is designed to provide Internal Control
provide reasonable assurance reasonable assurance regarding the Definition
regarding the reliability of reliability of financial reporting and
financial reporting and the the preparation of financial statements
preparation of financial in accordance with generally accepted
statements in accordance with .accounting principles
generally accepted accounting
.principles

:Key Observations

.The criteria used in both reports (COSO 2013 framework) are identical

Both reports maintain the same audit opinion that Amazon maintained effective internal
.controls

The audit procedures and the definition of internal controls are essentially the same in both
.years

The limitation of internal control is mentioned similarly, stating that internal controls cannot
.guarantee the prevention of all misstatements

.The only difference is in the dates (2023 vs 2017) and the report date (2024 vs 2018)

:REFERENCE

https://goni.to/en/audit-amazon-and-the-challenges-of-the-high-seaso

Racial Equity Audit Report Amazon

Annual reports, proxies and shareholder letters

https://amazon.jobs/content/en/teams/fgbs/internal-audit

https://www.amazon.com/External-Corporate-Governance-Financial-Reporting/dp/
1499292066

/https://www.caseware.com/us/products/idea