Assessment Of Detection Risk By Performing Substantive Analytics
Substantive analytical procedures related to consolidation policy
Based on the preliminary analytical procedures about ratios and account balances, I found some risk areas and great changes from 2013 to 2014 in financial statements such as the net income, investments in unconsolidated businesses, cash and cash equivalents, contributed capital, and non-controlling interests. After the review of the 10-k form, I found that the consideration paid for acquisition of Verizon Wireless was primarily comprised of cash and Verizon common stock . However, the sum of the decrease in cash and cash equivalents and the increase in common stock was not equal to the majority of $130 billion payment. Meanwhile, the decrease in non-controlling interests in balance sheet didn’t match with the decrease in net income attributable to non-controlling interests. The increase in revenue didn’t match with the decrease in non-controlling interests because of the acquisition of Verizon Wireless. Therefore, I decided to perform substantive analytical procedures to test investments in unconsolidated businesses, non-controlling interests, common stock, and related parties.
Recommended substantive analytical procedures to test investments in unconsolidated businesses with valuation…