What are the key economic factors about the industry in which the company operates? You can use this link as a starting point for your research on this question: http://www.marketingtutor.net/economic-factors-affect-business-environment/ (Links to an external site.). Don’t forget to also look at item 1 and 1A of your company’s 10-k report for specific risks for your particular company.
Where is the company in its life cycle? You can use this website to read about business life cycles: https://smallbusiness.yahoo.com/advisor/stages-business-lifecycle-challenges-100036770.html. (Links to an external site.) How might this affect audit risk? Are their different pressures (internal or external) that may affect the audit risk at different stages in a company’s life cycle?
What are the five or six most important factors for success in this business? You should be thinking outside the box a little here. Think about all kinds of things that make a business successful from it’s people, R&D, Patents, financial, international issues, and the legal and regulatory environments they all operate in.
Describe four or five significant business risks related to the client’s business and industry and why you think they are a significant risk that may affect how you plan and perform the audit. (Client business and industry risks are discussed in chapter 8 of the textbook. You should also be able to find specific risks associated with your particular company in sections 1 & 1A of the 10-k report. You can also find more information on identifying business risk at the following link:
http://www.investopedia.com/articles/financial-theory/09/risk-management-business.asp (Links to an external site.)) Again don’t forget to think outside the box a little bit here as well. Are any of the businesses unionized? Are they in involved lawsuits or patent infringement issues? Are there issues with regulatory agencies such as the FDA or local health authorities? These are all international businesses. Are there any extra risks involved because they are international?
Do any of the companies have warranty issues or patents that are expiring soon? For those of you who have Tesla as your company do you think Federal and State tax credits for purchasing electric automobiles have a significant impact on the business, audit, or industry risk? Why or Why not?
What notable accounting considerations are there for companies in this industry?
