Financial Self-Interest Threa
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Self-Review Threat
Advocacy Threat
Adverse Interest Threat
Familiarity Threat
Undue Influence Threat
Financial Self-Interest Threat
Management Participation Threat
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- 3. If you are an IT auditor, then the management told you that one of their former employee was hired in a competitor company. Allegedly, the former employee is bringing notable growth to that competitor company. The manager is worried as their company slowly declining in terms of profitability. He ask your advice on the matter. What advise should you give?Performance Principle: Planning. Your public accounting practice is located in a city of15,000 people. The majority of your work, conducted by you and two assistants, consistsof compiling clients’ monthly statements and preparing income tax returns for individualsfrom cash data and partnership returns from books and records. You have a small number ofaudit clients; given the current size of your practice, you generally consider it a challenge toaccept new audit clients.One of your corporate clients is a retail hardware store. Your work for this client has beenlimited to preparing the corporate income tax return from a trial balance submitted by thebookkeeper.On December 26, you receive from the president of the corporation a letter containingthe following request:We have made arrangements with First National Bank to borrow $500,000 to finance thepurchase of a complete line of appliances. The bank has asked us to furnish our auditors’ certifiedstatement as of December 31, which is the…You have a successful shop and feel that the demand for your shop has outpaced your capacity. You have decided to pitch your idea to a venture capitalist (VC). You brought in your income statement as you highlight that last year your gross profit was $500,000. the VC tells you that number is pointless. He asks you for your net profit. What information was the VC looking for? Why?
- [Words Limit: Up to 300 words.] After finishing your accounting degree, you joined an accounting firm. This is a medium-size accounting firm with a reasonable range of clients. You are in an engagement meeting with one of your clients, and your client's management raises some concerns. In particular, the management is concerned that the audit tests that you perform will disrupt operations. Your client has recently implemented a data warehouse. The management suggests that you draw the data for analytical reviews and substantive testing from the data warehouse instead of the operational database. Further, the management points out that operational data are copied weekly into the data warehouse, and all data you need are contained there. Required: Based on the given scenario, outline your response to the management's proposal and mention any concerns you might have.John is CFO at a venture-backed tech start-up with revenues of $20 million and approximately 80 employees. He has worked at the company for several years, and now reports to Ralph, the company's newly hired CEO.The company had been doing really well, but recently big customers have been placing fewer orders and Ralph is feeling pressure to show growth. This pressure is amplified because the company is venture-backed, and the investors expect results. While the company did well in the first round of funding, if they don't perform now, they may have trouble with gaining sufficient funding in the second round, which could mean the end of the company.All of this was on John's mind when Ralph came to him about recording a major order that was still under negotiation. The deal had not gone through, although both parties expected to complete the deal in the next week. With the current quarter ending in the next few days, including this order would give a significant boost to the company's…119-Mr. Abdullah is an auditor in XYZ LLC. His job is to see the correctness of financial statements and to give suggestions. He came to know that his company is entering into a new product line, so he started discussing about it on various places and about its projection in the future. In this situation there is a chance of a. Advocacy threat b. Familiarity threat c. Self review threat d. None of the options
- How could Pascal and Super Tech have identified and addressed this risk? What should Pascal do now? Case - Pascal is the manager of software development for Super Tech. He discovered that Bill, the lead software designer, has announced that he is leaving the company next week. Pascal finds that Bill has accepted a job with Super Tech main competitor. Pascal fear that in his new job, Bill will use technology developed while at the company and disclose the identities of key customers.WebSmart is a relatively new Internet company that sells educational products on the web. The firm focuseson students preparing for college entrance exams. The key competitive advantage at WebSmart is its highlyregarded publication, Guide to Competitive Colleges, which is sold widely in bookstores and on Amazon.com. The firm has grown rapidly and now is seeking additional venture capital investment to allow it toimprove its operations and provide additional advertising and promotion. One of the venture capital firmsthat WebSmart approached has asked WebSmart to provide an estimate of the firm’s value. Relevant financial information about WebSmart from the most recent financial statement follows. WebSmart owns nosignificant fixed assets but operates out of leased space. WebSmart management knows that the medianstock price-to-sales multiple in the industry is approximately 7.Total assets per most recent financial statements $1,450,000Total book value of equity, per most recent financial…Psst – Have some ideas? You’re in charge of accounting at a small company. Your boss stopped you in the hallway and asks you for your thoughts. It’s been a rough year and the financial statements aren’t going to look great. Is there something you can do or suggest to make things look better? Your boss has heard about companies that ‘cook the books’ or do other things to make things better. Maybe you could do the same?
- Question: If you were in Staci’s situation, what would you do? Ethical Dilemma Staci Sutter works as an ana-lyst for Independent Invest-mentBankShares(I2BS),which is a large investment banking organization. Shehas been evaluating an IPO that I2BS is handling for atechnology company named ProTech Incorporated.Staci is essentially finished with her analysis, and sheis ready to estimate the price for which the stockshould be offered when it is issued next week. Accord-ing to her analysis, Staci has concluded that ProTech isfinancially strong and is expected to remain financiallystrong long into the future. In fact, the figures providedby ProTech suggest that the firm’s growth will exceed30 percent during the next five years. For these rea-sons, Staci is considering assigning a value of $35 pershare to ProTech’s stock.Staci, however, has an uneasy feeling about thevalidity of the financial figures she has been evaluating.She believes the…You are working in a mid-size company for the last couple of years. Recently you are promoted as a Chief Information Officer (CIO) and excited to perform your new role efficiently. David Savage, Chief Operation Officer (CEO) of your company has decided to implement an Enterprise ResourcePlanning (ERP) system. David Savage has met with a consulting ERP firm based on a recommendation from a friend at his club. During a recent meeting, David Savage introduced the chief consultant, who was charming, was personable, and seemed very knowledgeable. The CEO’s first instinct was to sign a contract with the consultant, but he decided to hold off until he had received your input.Required: (350 words)David Savage asked you to write a memo presenting the issues and the risks associated with consultants. Further, outline a set of procedures that could be used as a guide in selecting a consultant.---------------Mr. Abdullah is an auditor in XYZ LLC. His job is to see the correctness of financial statements and to give suggestions. He came to know that his company is entering into a new product line, so he started discussing about it on various places and about its projection in the future. In this situation there is a chance of _________________. a. None of the options b. Familiarity threat c. Self review threat d. Advocacy threat Clear my choice