Case Study Of Nextcard, Inc. Audit Case Study

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Nextcard, Inc. Audit Case Study
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Summary of the Case
NextCard is a credit card business that targets online customers and for obtaining one million customers by 2000. In fact, in the year 2000 the company extended 1$ worth of credit to its customers (Weil, 2004). However, this did not translate to profit for the shareholders. As such, the media probed the CEO during media conferences, which he always shrugged. Owing to the losses made by the company, it became clear that it participated in fraud risks that included understatement of credit/losses, concealment of financial statements and inside trading. Additionally, the audit firm that had audited the company had a role in ensuring reasonable assurance and due professional care and diligence. As such, the paper will answer six questions on 2000 NextCard audit.
1. Should auditors evaluate the soundness of a client’s business model? Defend your answer.
Yes, is paramount for the auditors to check the soundness of client’ business model for a couple of reasons. Firstly, measures the degree of reliability of the model for various uses by the stakeholders. For instance, business people rely on the audit reports to make investment decisions. Additionally, management is confident when making routine and strategic decisions by applying audited information. Secondly, business model audit offers reasonable assurance about the accuracy of the business reports and models. This is

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