Flash Technologies, Inc.: Risk Analysis and Resolution of Client Issues

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Suggested Format for Flash Technologies Memo: General Business and Industry Risks: As illustrated in the table below, provide an analysis of business objectives and strategies and how they map to business risk, audit risk, related accounts, and their potential effect on the audit plan. For the two business objectives illustrated below, identify one or two additional risks associated with each objective and complete the remaining columns for all risks (note that the template has been partially completed). Business Objective and Strategy | Business Risks | Audit Risk (auditor’s concern) | Related Accounts and Assertions | Potential Effect on the Audit Plan | 1. Continue Expansion Internationally (acquisitions in other countries)…show more content…
Also examine the sales return policy and sales allowances to understand whether sales are being inflated in the current period only to be returned during the following period. | 2. Be a leader by having the latest technological advances and releases in the flash memory market | Insufficient number of existing and new customers accept the new technology | Overstatement of accounts receivables through fictitious sales. | Sales and accounts receivables being misstated due to overstated transactions: Existence Accuracy | Overstatement of sales and account receivables: Confirm that the sales are being made to non fictitious customers. | | High amounts of R&D expenses cause margins to diminish and cause concern among investors. | R&D expenses are not recorded, causing an understatement of R&D expenses | Expenses being understated due to unrecorded expenses: Completeness Accuracy Valuation | Understatement of expenses: Increase the number of R&D expenses being tested for material misstatements. Look at vendor invoices and company purchase orders to make sure all R&D expenses are recorded. | | Not having alternative suppliers for

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