Tiffany Case

This project presents an audit risk assessment on Telstra Corporation Limited using advanced accounting techniques

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.).

As focusing on each of the five management assertions for the inventory account, we discovered that there are some risky areas that indicate the need for further attention during the audit. First of all, for existence or occurrence, all items in the inventory account must physically exist and be available for sale. Thus, the auditors should physically count finished goods, copper rod, and plastic inventories, and determine actual increase of inventories at year end. Also, they should select items from the inventory ledger and locate them and reconcile the quantity. Second, for completeness, the auditors should make sure that all existing inventories have been recorded completely , go around the warehouse and ensure all the inventories are recorded in the inventory ledger. Third, for valuation or allocation, the auditors should make sure that Laramie Wire manufacturing sticks with one valuation method(For inventory items, valuation is based on the lower of cost or market value, with several alternative methods for calculating cost), find out if there is any scrap inventory that needs to be recorded and written off ,and ask about obsolescence items. Fourth, for rights and obligations, the auditor should ask them if there is any consigned inventory at their warehouse. If there is, those inventories should not be recorded in the company's inventory ledger. Finally, for presentation and disclosure, the auditors should review the company's financial

Preliminary analysis to understand the client‘s business and risk - Understanding the auditee’s business, environment, and risks

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.

The audit team focused on preforming groundwork analytical procedures. A comparison of the performance of Smackey’s Dog Foods Inc to other similar industries was used to validate the original assessment of the risks. Performing the procedures helped detect areas that pose a high risk of the material misstatements. Another important part of the planning of the audit was to set a balance of materiality that is appropriate. The situations that

In the early 1980 the consumer electronics industry was growing at an explosive pace. Between the 1981 and 1984 the total sales for the industry doubled. To support increasing sales massive amounts of inventory has to be procured, marked up and sold to consumers. Inventory becomes the biggest asset a retailer has. As part of the audit planning processes the inspection of the inventory system and verification of the actual inventory numbers should have been a priority. Crazy Eddie was able to inflate its financial results by fraudulently altering its inventory counts and was able to conceal these activities from the auditors for several years.

Written Case #1: Vera Bradley in 2014: Will the Company’s Strategy Reverse Its Downward Trend?

Products: The clothes are stylish, yet simple and built for comfort. The pieces in the collection were designed to work together, so customers could creatively vary their look from day to day. They were designed to make getting dressed easy, and to be versatile enough to be worn to work and out for the evening. Fisher was adamant about designing clothes for real women and developed forgiving silhouettes that flattered women regardless of their body type. The fluid clothes were designed to take the personality of the wearer.

In assessing the audit risk of a specific company, one must first look at the audit concerns of the overall industry in which it operates. Therefore, in order to properly evaluate Caesars Entertainment Corporation, the gaming industry must be taken into consideration. Specifically, industry trends and strategies, competitors, business processes, regulation and oversight, special accounting and financial reporting practices, internal controls, major risks, as well as the implications of those risks will be addressed.

“A business of any size must understand that poorly managed inventory can seriously affect cash flow and drain its finances dry.” (Nickels, McHugh, McHugh, 2014.)

In order to be able to emit an unqualified opinion in an audit, one should take the financial statements into account. Let’s first take a look at Rayonier income statements for the past three years. In referencing the income statement an auditor can conclude that one of the most important accounts on the income statement is the sales account. In looking at the sales account of Rayonier Inc. we can see

Despite the challenges, I am very thrilled with how much I benefited from this class and how useful this material will be for me, in both my personal and professional life. As an incoming associate at a public accounting firm, I will continue to pursue the traditional framework and integrated framework to measure firm performance. This process will include looking at profitability and accounting ratios to find how PwC is performing compared to their competitors, operationally and financially, and examine how profitable each client engagement is for the firm. Also, when determining if PwC should take on a new client, I will have to examine not only accounting profitability, but shareholder value creation and and economic value creation to evaluate the financial health of that firm to see if they would be a risky client or not. This screening process of potential new clients will also include using balance scorecard questions to examine how that company is viewed by customers and shareholders, their core competencies, and how they create value. The answers to all these questions will not only determine if PwC should audit that client, but it will help locate areas in the financial statements that pose risks of material misstatement and help determine the best testing of controls for the audit team to conduct.

Every firm faces risks, both internal and external, that must be dealt with. In order to assess risk, the auditor must understand what roll the area that’s being audited plays in the business. The purpose of risk assessment is to identify and evaluate the risks relevant to that area of the business and to determine how to manage these risks. The auditor then identifies the internal controls that regulate those risks – these are the internal controls the auditor should focus on. As a result of identifying the relevant risks, the auditor should be able to develop a scope for the audit. The goal is to provide a framework in which to develop the audit plan.

Tiffany and Company is one of the leading U.S. luxury jewelry brands, and their telltale “little blue box” has become a coveted item by women everywhere. Tiffany & Co. was founded in 1837 by Charles Tiffany and John Young and has grown to generate more then $2.6 billion in revenue through their 167 global retail outlets. The growth strategy that has seen them through their long reign is “growth without compromise”. In 2007, due to objections from their largest shareholder, Tiffany began looking at strategies to increase shareholder value. Two options were presented; opening new stores at a faster rate, and licensing Tiffany to an established Italian fashion-eyewear manufacturer/distributer.