Auditing Cases 6th Edition by Mark Beasley,Frank Buckless,Steven Glover,Douglas Prawitt

Exercise 1

Perform a risk analysis of Flash Technologies and document your findings in a written report. Use the two-part solution template provided on the next two pages (an electronic version of the template is available on www.pearsonhighered.com/beasley). The template is organized by General Business and Industry Risks (e.g., foreign ventures, high tech, etc.) and Financial Accounting/Reporting Risks (e.g., unusual ratios or significant increases in balances). Using only the information provided in the case (e.g., memo, annual report, and article), identify key business objectives and strategies and then map those on the template from business risks to the potential effect on the audit plan.
Auditors are required to specifically assess the risk of material misstatement whether caused by error or fraud. The AICPA's and PCAOB's "Risk Assessment Standards" may be useful source materials for your risk analysis. In addition, to help you identify risk factors, you should also perform analytical procedures based on the company's financial data and compare those results to your expectations and general industry ratios and trends. You may attach your analytical procedures to the solution template. Please provide polished, concise, professional analysis and writing. Get to the issues without unnecessary verbiage.