The dramatic increases in debt and the rising of AP would also catch my attention and warrant extra audit attention. Addleman, Associate Director for Enforcement in the Atlanta District Office, stated, "Shareholders depend on auditing firms as a check on the honesty of management.
Common sized financials and ratios are in Excel attached. They can apply for reinstatement after two years and one year, respectively.
Given these datacomment on what you believe were the high-risk financial statement items for the Just for Feet audit. I compared Just For Feet, Inc. The large high-volume stores also tend to have a high volume of cash Identify inherent risk factors common to businesses facing such competitive conditions.
Contemporary Auditing Real Issues and Cases 7th ed. Also, inventory is such a large proportion of total assets over half so it should get a lot of attention and work. Michael Knapp 1 Prepare common-sized balance sheets and income statements for Just for Feet for the period This cash flow looks more like a start up than a large established retail chain.
How should these risks affect the audit planning decisions for such a client? Also compute key liquidity, solvency, activity, and profitability ratios for Rank these risk factors from least to most important and be prepared to defend your rankings.
They are expected to respond appropriately to wrongdoing, adequately test the claims made by management and complete the work supporting the audit before issuing an audit report. Just for Feet falsified its financial statements by 1 improperly recognizing unearned and fictitious receivables and revenue from its vendors, 2 failing to properly account for excess, worthless and obsolete inventory and to disclose problems with excess inventory, and 3 improperly recording as income the value of display booths provided by its vendors.
The engagement partner, Steven H. Baker, CPA, were also charged. Typically a large chain would generate positive cash flow. Briefly explain whether or not you believe that the Deloitte auditors responded appropriately to the five critical audit risk factors that you identified.
Identify internal control risks common to such businesses. Identify the 5 audit risk factors that you believe were the most critical to the successful completion of that audit. Inventory controls are a large issue in large high-volume retail stores, particularly counting and valuing it.
I believe that the negative cash flow from operations should be an audit flag. Specifically, the Order finds that Deloitte, Barry and Baker did not respond adequately to indications that the company was recognizing unearned and fraudulent vendor allowances as income.
Solution Summary Your tutorial is words and includes a list of ten audit risk factors and discussion about features of large retail chains that increase audit risk.
Before responding, identify the parties who will be affected by your decision. A set of common sized financial statements and ratio computations are provided in Excel. The Order also denies Barry and Baker the privilege of appearing or practicing before the Commission as accountants with a right to apply for reinstatement, with respect to Barry, in two years, and, with respect to Baker, in one year.
The biggest thing that sticks out to me is the inventory turnover.Prepare a comprehensive list, in a bullet format of the audit risk factors present for the Just for Feet audit. Identify the five audit risk factors that you believe were most critical to the successful completion of that audit.
We will write a custom essay sample on Feet case study specifically for you. for only $ $/page. The Order finds that Deloitte formerly served as the auditing firm for Just for Feet and assigned Barry and Baker to serve as the engagement partner and audit manager, respectively, for its audit of the company's financial statements.
Just for Feet, Inc Just For Feet, Inc. operates retail stores in the brand name athletic and outdoor footwear and apparel market. Just for Feet was found in with the opening of a small mall based store and opened its first super store in Just for Feet. ACCT Auditing Just For FEET, Inc. Case Analysis: Case #, 5 Beka Vinogradov Seat #1 1 Beka Vinogradov ACCT Case Analysis #1.
Just for Feet, Case Study 1. All Case 1 3 Just For Feet Essays and Term Papers.
Identified Just for Feet a "greater than normal" level of audit risk Failed to follow-up when not provided supporting documentation for the vendor allowances Did not test to see if receivables were paid.
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