Fluent, Inc. is a performance marketing company that began in 2010.
Currently they are trading under FLNT on the NASDAQ stock
exchange. Some risks that Fluent identifies in their 2021 10-K report
directly affect receivables and payables. Fluent states that 35% of
their revenue in 2021 was only from 10 clients, with one advertiser
accounting for 11.7% of consolidated revenue. This is a major risk
because if one or more of these 10 clients changes their budget or
stops working with Fluent there can be a significant effect on
receivables. Since a high percent of revenue is concentrated on only
10 clients, auditors should be extra diligent when reviewing these
clients to ensure all revenue is legitimate. Auditors may even want to
have a separate audit of these 10 clients to ensure all information is
reviewed and verified.
Another risk Fluent faces is their legal liability since they create and
distribute digital media content to third parties. Deceptive
advertising, copyright, or trademark infringement by these third
parties can cause legal issues for Fluent since they created the
content. As a result Fluent may be faced with lawsuits that may lead
to financial liabilities on their payables. Auditors should be reviewing
all current and potential legal liabilities. Reviewing legal case work
and what caused the liability is something auditors should do in order
to ensure the liability is accurate. Lastly, Fluent mentions that the
application of tax on their services may impact their revenue streams.
Fluent has had to begin charging tax for clients in specific states. This
can be troublesome for the clients who generate higher revenue
because it will largely increase their liability to us. Clients may begin
to lower their budget in order to account for these tax increases.
Auditors should review clients who are being charged tax to ensure it
is accurate and only clients who should be getting charged are getting
charged.
Fluent, Inc. 2021 10-K
https://www.sec.gov/ix?doc=/Archives/edgar/data/1460329/0001
43774922005701/flnt20211231_10k.htm
