Essay about Case Study Question Unit 3
2) Just for Feet operated large, high-volume retail stores. Identify internal control risks common to such businesses. How should these risks affect the audit planning decisions for such a client?
Some internal controls risks common to high-volume retail stores would be theft of inventory, inventory accounting methods, false accounts receivable confirmations, separation of …show more content…
Historically interpreted accounting standards aggressively placing significant emphasis on earnings, large increase in vendor allowance receivables, nonstandard accounts receivable confirmations, discrepancies in A/R amounts, and confirmations large increase in inventory 2 monthly booth income amounts Ambiguous booth assets confirmations The 5 most critical factors would be: * Large increase in vendor allowance receivables * nonstandard receivable accounts confirmations * large increase in inventory * significant emphasis on earnings * monthly booth income amounts.
The most important would be the large increase in inventory. This seemed like the biggest change from 1997 to 1999. If I were an auditor I would want to look into why the inventory amount tripled in two years and look to see if there were any misstatements. Deloitte found out that the inventory for which no items had been