INSTRUCTIONS FOR TEAM PRESENTATION AND TERM PAPER BUSINESS AND AUDIT RISK
Introduction: An auditor needs to gain an understanding of a client’s Understanding of the Client’s Business operations and processes (i.e. Major sources of revenue, key customers and suppliers, sources of financing, Information about related parties) and Industry and external environment in order to determine risk associated with certain industries, inherent risks common to all clients in certain industries, unique accounting requirements. The auditor’s primary concern is the detection of material misstatements in the financialstatements due to client business risk. Thus each team is being asked to choose an industry and analyze the related business and audit risk.
Instructions:
The following is a link to the SEC’s Accounting and Auditing Enforcement Releases where a fraud and related industry which choosed:
#1911 (Gateway, Inc.)
https://www.sec.gov/litigation/admin/33-8338.htm
The team will be required to obtain/study:
• annual reports of companies in the industry,
• industry audit guides (RIA Checkpoint in Library databases)
• analysts’ comments
• library resources (i.e., Factiva, Dun and Bradstreet, Standard and Poor’s)
• consider speaking to individuals working in the industry or auditors in public accounting to assist you in identifying business and audit risks peculiar to the industry you have selected.
1) Summarize individual company Annual Report data and information to support your findings from one company in the industry (technology industry)for three pages (These need not be fraud cases).
2) Detailed analysis of business and audit risks and audit procedures to address these risks
– (i.e., investment valuation may be an audit risk, so what audit procedures do you think we should perform to audit investments and valuation)
-A company that is within the technology industry and discuss the audit and business risks for that company as compared to the industry risk (Gateway Inc. Case).
3) References and support (NO WIKIPEDIA is to be used as a research source!)You may, however, include annual reports of companies, you examined.