Modern Tastings Inc.

I was immediately intrigued from the beginning of Food, Inc. There was interesting and valuable information brought up during the film. Many people do not think about where their food comes from. I believe that if people were to know where their food comes from, they would not want to eat it. There are 47,000 products at a grocery store. But, Food, Inc. implies that this is in fact an illusion because all of them are made with the same crops. The fact that there are only a few multi-national corporations that control all of the crops and meat production is a huge surprise. I believe that each person in society would be absolutely shocked if they were to watch this documentary.

Knowledge about risks related to the company evaluated as part of the auditor 's client acceptance and retention evaluation; and the relative complexity of the company 's operations. ( Auditing Standard No. 9 //. (n.d.).

The Intensity of Rivalry among Competitors in an Industry (High): Equally balanced competitors exist within the industry such as BCF and KMD; these firms also face competition from retailers and wholesalers. The growth of the industry is relatively agile in both financial and technological aspects. The intensity or rivalry is further accentuated by relatively high storage and fixed rental costs, extensive product differentiation and minimal switching costs.

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

Answering this question requires knowledge of three terms. The three terms are absolute amounts, materiality, and percentage analysis. The text defines absolute amounts as the absolute dollar amount of a given trend (Edmonds, Tsay, & Olds, 2011). For example, if a company had a net income amount of $400,000 in a given year, it could be reported in its absolute dollar amount of $400,000. The relative importance of the information defines materiality. An item is considered material if knowledge of it would influence the decision of a reasonably informed user (Edmonds, Tsay, & Olds, 2011). For example, a net income amount of $400,000 may be extremely material to a new start-up business; however, a $400,000 expense may immaterial to a 10-billion-dollar company like FedEx. Percentage analysis involves computing the percentage relationship between to amounts (Edmonds, Tsay, & Olds, 2011).

Elder, A. A., Beasley, M., & Elder, R. J. (2014). Auditing and assurance services (15th ed.). Upper Saddle River, NJ: Pearson.

definitely recognize the importance of this as seen through their capturing of the company’s sales in percentage according to different categories of items. Various items such as foods, sundries, hardliners and fresh foods among others have been captured in the company’s annual report according to their percentage volume of net sales for the company for the last three financial years. The categorisation of items allows both the company’s directors and outsiders to keep up with the economic reality of the company’s performance over the last few years. The directors can then, for example, decide to increase the amount of warehouse space afforded to foods depending on the consistent performance of the category in terms of percentage volume of sales.

“Keystone Computers & Networks, Inc. (KCN) is a company that sells and installs computer workstations and networking software to business customers. The CPA firm of Adams, Barnes & Co. has audited the financial statements of KCN for the past three years. The case illustrates selective audit planning working papers that were prepared by the staff of Adams, Barnes & Co. for this year’s audit.” I will be listing the order in which I would perform this audit and I will decide if I should select the client and focus on the key audit objectives while applying the audit risk model.

Consumer Demand Risks | Not being able to respond to consumer wants/demands quickly enough, leading to short-term revenue loss | Marketing Team | Consumer interests change, other companies offer newer/better product | Medium | Medium | Medium |

Product Innovation – Innovation of new products had failed many times and MTI has lost reputation with Wall Street. This process had been placed on the backburner and when the CEO came on board there were only six products in the pipeline. Therefore, to be successful in the future, MTI needs to invest more in R&D and focus on delivering new products.

When planning materiality, I took 5% of income before taxes to obtain the $75,400, which in this company is a material number. Once I had this number I then went through each account and compared the 2014 and 2015 numbers. I calculated the difference between each year, any number found with a difference of $75,400 or more, had a high risk of materiality misstatement. The accounts that appeared to be at risk of being materially misstated are: Cash (existence), Short-term securities, Accounts Receivable and Sales (existence, occurrence, completeness), inventory and cost of goods sold (existence, completeness), Other current assets, fixed assets and depreciation (classification, completeness, valuation), accounts

In today’s business world, competition is a big concern for nearly every corporation. The competition on the market is getting stronger and more difficult to overcome, in many situations corporations terminate their products, production, or their services, just because it is impossible to continue; the cost is too high to focus on gathering development projects in marketing, production, market research, and product innovation, to fight against the competitors.

The auditor’s responsibility is not to evaluate a client’s business model but to have a sufficient understanding of the entity. An auditor needs a sound and comprehensive understanding of the client’s business and industry to develop valid expectations about financial-statement assertions.

Rittenburg, Larry. Johnstone, Karla. Gramling, Audrey. (2012) Auditing: A Business Risk Approach 8e. Mason: South-Western, Cengage Learning.

To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors’