due in 48hrs accounting

Homework

Audit Planning

Please respond to the following:

--Determine both the relationship of risks in the planning of the audit and factors that influence those risks. Speculate on which type of risk creates the most uncertainty for the auditor, and recommend at least two ways to plan the audit to mitigate those risks. Provide specific examples.

--Imagine that you are a senior auditor, and your firm has been selected to audit a medium-sized sporting goods company with one single location. Describe the four phases of an audit and discuss the key factors that would help you determine how to plan the audit for this company. Provide specific examples. (1-2 references 350 words)

Accounting Irregularities

Please respond to the following:

--Imagine that you were auditing accounts receivable balances to confirm sales and found significant discrepancies between the recorded account balances and returned confirmations from customers. Recommend an alternative approach to confirming sales revenue. Provide rationale for your recommendation.

--Using the case as a reference and from the e-Activity, discuss the improper recognition treatment you researched, and make a recommendation regarding the type of analytical procedure that should have detected the improper accounting transactions. Propose the internal control activities or audit plan that might have detected the improper transactions. Be specific with your recommendation. (1-2 references 350 words)

FOR REFERENCE

This case has three basic objectives.  First, it is an almost stunning example of embezzlement at a publicly traded company.  Koss’ reported revenues from 2005 through 2009 ranged from $38 billion to $50 billion, yet the firm’s CFO allegedly embezzled $50 million.  The case provides information on the firm’s executive team and its board of directors.  The executive team consists of Koss family members and long-term employees; the board of directors consists of elderly business owners, most of whom have been on the board for dozens of years and who are almost certainly personal friends of Koss’ founder.  The head of the Milwaukee office of the firm that audited Koss was, allegedly, a personal friend of both Koss’s CFO.  All of those factors greatly weaken a firm’s governance and control.

Second, it provides an example of how to analyze financial statements for the effect of embezzlement, with very little information about what occurred.  When Koss halted trading in late 2009, all that market participants knew was that Koss had alleged embezzlement of $40 million.  The firm’s share price declined from $5.50 per share prior to the trading halt, to $3.90, when trading resumed, or a 25% decline in value.  The case situation describes a hedge fund manager who has analyzed the firm and who with no more information than what is available in the case, takes a position in Koss.  Students are asked whether the hedge fund manager busy Koss stock or sells the shares short.  By analyzing the financial statements, students should be confident that while Koss has clearly been harmed in the amount of $50 million, its balance sheet is probably reasonably sound and that in the future Koss will be far more profitable (because the CFO will no longer be embezzling $5 to $10 million annually).