Team Planning Event and Risk Assessment
Order ID | 1168259769 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subject | Accounting | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Topic | Risk Assessment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Type | Case Study | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Writer level | University | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Style | APA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sources / references | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Language | English(U.S.) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Profile – High Risk Key findings:Description / paper instructions I am not sure how many pages you need. If you need extra pages just tell me.
Risk profile – Client acceptance
Understand the business – Background
Email from Audit Partner to you: To: Audit team CC: From: Jim Partner, CPA of Gauchos LLP Re: Team Planning Event and Risk Assessment
Dear Audit team: Welcome to the audit team for DRI. My name is Jim Partner. I have been with Gauchos LLP for 22 years. Currently I am on vacation in Aruba with my family, but thought I would check some emails and send some new information to you to help get started. We have our team planning event in a few days, so you should have all of the risk assessment steps of our audit complete prior to this. This year, DRI has hired Scott Fulkerson, as their CFO. I used to know Scott back in our golf days when we used to tour the world and compete in junior golf tournaments. He was a pretty good golfer (no Tiger Woods), but honestly I felt when people weren’t looking he was improving his position by moving his ball without others knowledge. He was never caught, but I always had a hunch. However, that was in the past and based on his current resume, he worked at a public accounting firm for 14 years and has a history of public and private company experience as well as IPO experience. Rumor has it that he turned down an offer to make Partner because he indicated he would rather make less money and work more hours at DRI. We have completed the background check on Scott utilizing our forensic team and found nothing unusual. The Company has continued to borrow debt in the current year which has increased how much debt the Company has. This is common for companies such as DRI as they continue to grow and expand they will borrow from the bank to grow the business through either asset purchases or purchasing competitors businesses. We have seen several new business combinations from DRI in the last few years including the current year Brophy Brothers Brochures acquisition. Rumor has it that they have their eyes on a Monster acquisition in the future. For our team planning event, I would like you to interview the CFO about the current status of the business. However, you should probably review the financial statements and ask for preliminary changes in the balance sheet and income statement to see if there are any new areas or areas of concern for the audit this year. After gathering this information, you should identify what you think are the:
Lastly, we can’t do an audit unless we have a planning materiality level. Please utilize our firms methodology to determine what our planning materiality, tolerable testing threshold and our summary of audit differences (SAD) nominal posting scope should be. Ok, time to finish my pina colada. Enjoy working while I finish improving my tan. Don’t stay too late. Jim
Planning Materiality
Prepare a preliminary materiality levels based on the pre-audited balance sheet and/or income statement received from the CFO. This is attached in this file. BS and IS Utilize the firm methodology to select a financial metric to use for materiality. You should determine three numbers. PM – The first is known as a planning materiality (PM). This is the threshold that is considered a material misstatement (one which would be significant enough to materially influence or change the opinion of an investor if the financials were wrong by this amount). PM is usually set using a metric that is what the users of the financial statements evaluate the earnings of a Company. If the Company is making money, this will typically be an earnings metric (Pretax income, EBIT, or EBITDA). If they are at a net loss then potentially an auditor would look at another basis such as Assets or Equity or Revenue. Hierarchy of best form of metric to use for PM:
TE – The second is what is known as your testing threshold or Tolerable Error (TE). This is usually set at either 50% of PM or 75% of PM. If there are more risks identified, changes in management, significant transactions during the year it should be at 50%. SAD – The summary of audit difference (SAD) amount is known as a nominal amount and would be an amount that if an auditor finds to be different than the information obtained would be asked to be fixed. Although much smaller than PM, these amounts could add up and eventually be more material so to ensure the financial statement are recorded correctly it is the auditors goal to get all SAD entries recorded. However, the client may not always record these. This amount is set at 5% of PM. Determine PM: Prior year PM
* Due to first year audit, Gauchos LLP defaulted to the low end of the range for both PM and TE. Current year PM(Please complete)
Metric used for PM and why? (Please complete) % used for PM and why? (Please complete) % used for TE and why?(Please complete) Planning Analytics Based on your assessment of PM and TE, perform a planning analytics review by calculating the change and percent change in the balance sheet and income statement balances from the prior year and investigate changes greater than TE and 10%. Determine which accounts need an explanation and then inquire with CFO, Scott Fulkerson. Utilize the Balance sheet and income statement attached above to fill in your notes. (Please complete in attached excel file in planning materiality section) Identify the Risks Based on your understanding of the client and the environment, document what risks you believe are present for the Company. IR (inherent risks) are risks that are inherent in the industry. SR (Significant risks) are risks that are significant to the Company and where errors may occur. FR (Fraud risks) are areas where you believe management may be fraudulently manipulating the financial statements. Note: Identify the two most relevant risks for each category and what account they affect (balance sheet and/or income statement account they may impact) and these will be discussed at the Team Planning Event to determine(Please complete): IR1 – Consumer demand may change and customers may shift their focus and no longer print hard copy brochures and change to electronic forms. Business cards are becoming more and more obsolete with introductions via email. (Inventory) IR2 – SR1 – SR2 – FR1 – FR2 – Scope in the accounts being tested in simulation(Please complete):
|
|
||||||||||||||||||||||||||||||||
GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDERCLICK ON THE LINK HERE: https://www.perfectacademic.com/orders/ordernowAlso, you can place the order at www.collegepaper.us/orders/ordernow / www.phdwriters.us/orders/ordernow |
||||||||||||||||||||||||||||||||
|