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Success in financial business management: A case study Site and Sounds Ltd

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  1. Introduction
  2. The audit risk involved in the company's financial statements
  3. Comparison between the 2005 and 2006 financial statements
  4. Description of strength and test of control
  5. Description of weakness and possible internal control
  6. The accounting frauds and scandals perpetuated by management
  7. Conclusion
  8. Bibliography

List the factors that may affect your assessment of S&S's inherent risk i.e. factors that increase as well as those that decrease inherent risk. Briefly discuss the impact of your analysis on your overall audit plan. Audit risk is the risk that my audit team provides an inappropriate opinion on S&S's financial statements for the year ending June 30 2006. In other words, it is the risk that my audit states that the Company's financial statements present fairly the financial position of S&S when it fact they don't. Audit risk is computed by multiplying the inherent risk, control risk, and detection risk.Second, inherent risk is the risk that measures my audit team's assessment that there may not be material misstatements in the Company's financial statements before considering the effectiveness of S&S's internal controls. Remember that the risk attributable to internal controls is considered in control risk. As such, if my team concludes that there is a high likelihood of misstatement, without taking into account internal controls, then my team concludes that the inherent risk is high, and hence would modify the overall audit plan accordingly.Taking all the above into consideration, the following are the factors that may affect my assessment (as the audit manager) of S&S's inherent risk i.e. factors that increase as well as those that decrease the Company's inherent risk. For each factor, I briefly discuss its impact on my overall audit plan.

[...] So Betty can replace Bob as the S&S's audit partner to ensure the public and S&S's stockholders of the integrity and independence of the audit firm and its opinion on whether the financial statements of the S&S present fairly the financial position of the Company as of June Because the audit firm has rendered a series of one off internal control reviews and accounting advice for the audit firm needs to undertake measures that the audit it performs for S&S financial statements for the year ended June is independent, objective, and with integrity. [...]

[...] Enron was accused of accounting fraud in order to hide the true financial health of the company and in order to further inflate the company's stock price but, now, no longer exists. The telecom giant WorldCom's underreporting of nearly billion in expenses (Electronic Commerce News, 2002). But before I argue against the statement ?Auditors are to blame for the recent spate of major corporate collapses. They side with management rather than protect the poor shareholder. neither the profession nor the government does much about these let me just say something about ethics first. [...]

[...] From the above computation and from my team's analytical review, I have identified the following areas that need special attention during the audit of the Company's financial statements for the year ended June 30, 2006: Both the profit margin percentage and the profit margin ratios decreased from their 2005 levels. Although this is contrary to the Company's statement that it has improved its profit margins, special attention to how the company recorded its sales specially those occurring at the end of the accounting period is needed. [...]

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