Week 3 Team Assignment Document\u00a0\t\u00a0\t\u00a0\tYou are a senior manager for the highly successful regional CPA firm of Fine, Dee, Evah, Dense, LLP (Fine). Since its inception nearly 30 years ago, Fine’s audit practice has exclusively consisted of auditing private and not-for-profit organizations. Recently, the partners have been considering an opportunity to audit a publically-traded company for the company your team has selected.\t\u00a0\tThe primary reason Fine has not heretofore ventured into auditing publically-traded companies is because of the potential risk and legal liability associated with auditing public companies. However, Fine has been a bit stagnant, business-wise, for the past few years, and some of the older and more risk-adverse partners are beginning to retire. Consequently, the lure of the often-lucrative and prestigious opportunity to audit a public company has become too hard to resist, so the partners have decided to pursue the chance to audit this company.\u00a0\t\u00a0\tOn a beautiful early-September morning you are called into the senior partner’s office and told you and your team have been selected to lead the first-ever effort to audit a publically-traded company for Fine. You are honored, but also know auditing a public company is a bit more tricky and complicated than auditing private and not-for-profit organizations. Fortunately, the senior partner had considerable experience early in his career with another firm in auditing public companies and told you he would be with you all the way. \u00a0Relieved, you asked him what he wanted you to do. He tossed you the most recent Form 10-K of the company you selected and gave you the following assignments: \u00a0\t\u00a0\tReview and discuss the Form 10-K for the company you have selected.\u00a0\tCreate a report that will have 4 sections.\u00a0\t\u00a0\tSection 1, Initial Risk Assessment.\t\u00a0\tHint: The business and risk information is usually found in the first part of the Form 10-K. However, for the risks, do not simply restate what is in the Form 10-K. Think like a senior manager at a CPA firm “\ufffd what accounts (Cash, A\/R, Revenue, Inventory, etc.) might be the most potentially risky and why? For example, an airline might not have the same inventory considerations found with a retail outlet like Wal-Mart.\t\u00a0\tIn 700-to 1,050-words:\tDescribe the business briefly.\tAssess any risks you may encounter in auditing this company.\t\u00a0\tGeneral Audit Concerns\t\u00a0\t“\ufffd The requisite background you and your team will need to adequately audit this company.\t“\ufffd Time it will take to adequately audit this client.\t\u00a0\tGeneral Business Concerns\t. \u00a0\t“\ufffd Has the company you’re auditing recently increased or decreased their operations due to mergers or sales of parts of the business? \u00a0\t“\ufffd Are they a conglomerate with lots of disparate kinds of goods and services, or are they a simple straight-forward type of business operating in a relatively small location?\t“\ufffd Are operating supplies (such as jet fuel or specialty plastics) in short supply or subject to wild pricing swings on the open market? \u00a0\t“\ufffd What about overseas operations “\ufffd are they operating in dangerous parts of the world?\t“\ufffd How robust or intense is the competition in this particular industry?\u00a0\t“\ufffd Has their top management recently been replaced and if so, why?\u00a0\t“\ufffd Is seasonality a factor for this company? How does that affect revenue and other operations?\u00a0\t\u00a0\tDescribe the following issues:\t\u00a0\tEthics and Legal Issues\t\u00a0\t“\ufffd The ethics and sophistication of top management and cultures where the company operates. \u00a0\t“\ufffd Have there been significant auditing or accounting issues raised in the recent past? \u00a0\t“\ufffd Did they have disputes with their previous audit firm?\t“\ufffd Is this company or industry particularly susceptible to lawsuits or other legal proceedings? \u00a0 \u00a0 \u00a0 \u00a0\t\u00a0\tEvaluate the regulatory and compliance requirements of this company:\t\u00a0\tRegulatory and Compliance Concerns\t\u00a0\t“\ufffd The compliance requirements of this company.\u00a0\t“\ufffd Is it subject to a high-level of governmental regulation? \u00a0\t“\ufffd Are employees unionized? Are they generally compliant with Sarbanes-Oxley and other regulatory rules?\u00a0\t\u00a0\t\u00a0\tSection 2, Analytical Procedures\t\u00a0\tBased on TABLE 8-1, p. 220 Examples of Planning Analytical Procedures and the sections on Analytical Procedures in the text, select three ratios (e.g. Current Ratio, Inventory Turnover, Debt to Equity, Return on Assets, etc.), calculate these ratios for your company and a competitor for the most recent year, and compare the results. \u00a0\t\u00a0\tWrite a 350-to 525-word analysis of your findings. Note that these ratios are found in the Common Financial Ratios section of Chapter 8.\t\u00a0\t\u00a0\tSection 3, Materiality and Risk \u00a0\u00a0\t\u00a0\tThe senior partner wants to confirm your understanding of key concepts.\u00a0\tSummarize each concept 90-175-words each.\u00a0\t\u00a0\t“\ufffd Materiality\t“\ufffd Misstatement\t“\ufffd Audit Risk\t“\ufffd Audit Risk Model\t“\ufffd Inherent Risk\t“\ufffd Relationship of Risk to Audit Evidence\t\u00a0\t\u00a0\tSection 4, Audit Tests\t\u00a0\tThe reading in Chapter 13 (p. 402-407) describes five types of audit tests of financial statements:\u00a0\t(1) Risk Assessment Procedures\t(2) Test of Controls\t(3) Substantive Tests of Transactions\t(4) Analytical Procedures\t(5) Tests of Details of Balances.\t\u00a0\tIn 350- to 700-words:\tIdentify which tests are best suited for the company you selected and why.\u00a0\tExplain why some tests are not suitable.<\/p>\n","protected":false},"excerpt":{"rendered":"
Week 3 Team Assignment Document\u00a0 \u00a0 \u00a0 You are a senior manager for the highly successful regional CPA firm of Fine, Dee, Evah, Dense, LLP (Fine). Since its inception nearly 30 years ago, Fine’s audit practice has exclusively consisted of Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-199551","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/199551","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=199551"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/199551\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=199551"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=199551"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=199551"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}