1. Company Information: Identify the company’s basic information, including each of the following – Company name, Company’s date of formation, industry in which the company operates, company’s size in terms of annual sales, company’s size in terms of total assets, company’s size in terms of employees (all full- and part-time), company’s size in terms of total market value, location of company headquarters, including the states and countries in which it operates.
2. Customers and suppliers: Identify the company’s top three customers and suppliers.
3. Financing: Identify the company’s sources of financing.
4. Related Parties: Identify the company’s related parties, including people and other companies.
5. Company Life Cycle: Identify the current stage in the company’s life cycle.
6. Risks: Identify three risks associated with this business and/or industry.
7. Economic Factors: Identify two key economic factors that affect the company and how it stands with respect to these factors.
8. Accounting: Describe one unique accounting consideration for companies in this industry.
9. Relevant matters: Discuss any legal, regulatory, and social matters the company is faced with.
10. Additional questions: Recommend two additional questions you would ask a company representative in an interview setting. Justify your question recommendations and identify the individuals within the company to whom you would ask each question.
• Analyze the data compiled in Part A and, based upon your analysis, discuss the three primary audit concerns. For example, this may include inventory valuation and existence, receivable collections, overstatement of revenues (fictitious sales, premature revenue recognition, manipulation of adjustments to revenues), accounts payable and purchases fraud, concerns with pension plans, etc.
• Perform preliminary analytical procedures.
1. This includes vertical analysis, ratio analysis, trend analysis, etc.
2. Determine if the company is growing or declining based on the results.
3. Identify any fluctuations in accounts. Justify the fluctuations.
4. Provide the company’s stock price.
5. Identify the financial strengths of the company.
Prepare a broad-based audit plan based upon your findings.
1. Determine the impact of the prior year’s audit opinion for the current year’s audit plan.
2. Recommend whether the control risk of your chosen company should be assessed at the maximum level or below. Justify your recommendation.
3. Discuss the control risk assessment identified in #2 and what impact it will have on the audit procedures to be performed. Include in your discussion each of the following:
• nature
• timing
• extent
4. Identify areas of focus for the upcoming audit, including specific balance sheet andincome statement accounts based upon the significance of those accounts and their related risks.
5. Recommend which accounts identified in part #4 should be tested using analytical procedures and which accounts should be tested through substantive tests of detail. Justify your recommendation made.
6. Discuss whether or not there is a going-concern consideration.
7. Recommend whether the audit should be conducted at one main location or if the audit team should be dispersed to other locations.a. Justify your recommendation made.