Target Analysis Summary We carefully reviewed Target’s 10 K report and found that Target’s auditor Ernst& Young LLP, expressed unqualified opinions on both Target’s consolidated financial statements and internal controls. Based on that, we reviewed the notes to Target’s financial statement and concluded summary in the following. According to independent auditor’s report, financial statements of Target Corporation and its subsidiaries comply with US GAAP, and Target doesn’t have significant accounting policy changes for the past year. No major development beyond the end of accounting period was found in the notes. Also, based on Target’s income statements, Target doesn’t have any revenues or expenses non-recurring in nature.
RESISTANCE TO CHANGE Problems at Perrier Introduction The environmental pressure to change for Perrier’ was associated its declining sales. The change management initiative began when Nestle’ acquired Perrier in 1992. Nestle’ on the other hand, was pressured make the change in Perrier’s organizational structure due to its acquisition and the pressure to maintain corporate reputation and the credibility with its stakeholders. The process to manage the change management initiative was not strategic. There were no specific persons involved in the change to either operate in the roles of navigator, coach, interpreter, caretaker or nurturer.
Part 1 Question 1 — Strategic Business Risk and Inherent Risk Assessments ! a) Strategic business risk is defined as the risks that business objectives would be attained due to external and internal factor, pressure and forces and is the risk associated with the company’s survival and profitability (Bell et al, 1997). To assess HIH’s strategic business risk properly, the auditor must understand at two levels, (1) the industry in which HIH was operating and (2) how HIH fitted within the industry. SWOT analysis is one of the methods of assessing client’s strategic business risk. It analyses the entity’s competitive situation by assessing its strengths, weaknesses, environmental opportunities and threats.
• Weak control activities Lack of segregation of duties. Sales representatives were given full access to accounting system, inventory and customer orders. The receptionist doubled as secretary and bookkeeper. The delivery workers worked in the inventory warehouse. Also, poor physical control for assets safeguard.
1) b. 2) c. 3) d. 3) Problem 2-20 a. Since Rossi and Montgomery, CPA never had a client go public before, it would probably be a challenge for them to perform all the audit work for a public company since there are more requirements of the company to file with the SEC. The firm needs to assess whether they have the proper staff and training to audit a public client. Also the CPA firm cannot perform any more consulting or accounting services for the audit client since it is not allowed under the PCAOB audit standards.
This leaded to a displacement and diffusion of responsibility. When the system is in charge for decisions, moral disengagement of the employees appears. 3) Loss of autonomy Do to the fact, that everything was guided and recommended by the IT System, there was no space for personal reasoning and finally nobody felt responsible. 4) Change of business strategy Through the acquisition of the LPB business the original “Feel-Good-Strategy” of Mrs. Field´s cookies was gone. Further not to franchise the original cookie business and to diversify the business concept was not beneficial and leaded to high depths of the company.
List the key internal control weaknesses that were evident in the Huntington unit’s operations. a. There was no segregation of duties involving the accounting system (that was off the shelf and probably not sufficient for proper performance for the company) b. There was little to no security protecting inventories off site c. There was no traceable sales order process d. There was no consistent recalculation of sales orders and respective recounts of inventory to match sales orders e. There was a lack of internal discipline for complaints filed against employees f. There was a lack of employees available to properly handle inventory and dispose of obsolete inventories g. End of year physical counts were not recounted by different personnel
A. What factors should have been considered by Nichols in the risk analysis prepared during the planning phase of the audit? Screening process in the planning phase of the audit would have helped Nichols in determining the following factors: ➢ Nature of the Test ➢ Timing of the test ➢ How extent the Test needs to be Inherent Risk at an account level and overall financial level should have been assessed at the planning phase. Some of the other factors that were needed to be considered by Nichols were: ➢ What risks are present in their business that makes it a risky venture? ➢ Risk associated with the type of product they carry, company may carry products that went obsolete.
ADM 4245 ACCOUNTING THEORY TERM PAPER Information Asymmetry, Moral Hazard, and Adverse Selection – Implications for Accounting and Auditing SUMMARY The purpose of this report is to identify some information asymmetry problems that are prevalent in the accounting world, and to determine the possible impact that they can have on accounting and auditing. This report discusses the causes and effects of information asymmetry and discusses possible solutions that are being used to minimize it. After examining specific theories, it is evident that information asymmetry is undoubtedly the most important concept of financial accounting theory. It continues to exist and poses a threat to accounting and auditing standards. INTRODUCTION He didn’t coin the term “lemons,” but whenever consumers get stuck with one - whether it’s a used car, a faulty appliance or a less-than-adequate health care insurance policy - George Akerlof’s prize-winning theory comes alive.
2. Lord and Taylor This is an example of a descriptive mark because it uses the surnames of its founders. This is a great example where a brand’s name and logo is neither memorable, pleasant nor even easy to read (the logo). In my experience this is a weakness for the brand. For instance, the first few times I drove by the department store and looked at the logo I could not read what its name was nor figure out what was it about.