Leanna Whyte | 12/5/2011 |
Knowledge of the Business 1 Position within the Industry 3 Economic Position 3 Related Party 4 Corporate Governance 4 Significant Risks 5 Audit Risk 7 Overall Audit Strategy 8 Materiality 9 Fraud Risk Assessment 9 Risk Assessment Procedures 9 Key Risk Factors 10 Factors Decreasing Fraud Risk 10 Assessment of Possible High Risk Accounts 10 Overall Conclusion 11 Analytical Procedures 11 Information System 12 Expenditure Cycle Analysis 13 Going Concern Assessment 14 Top Three Laws & Regulations 15 Laws & Regulations …show more content…
Since these sources of financing are secured and imposed certain restrictive covenants, they pressure management to ensure that the company is operating within the covenants required by the bank. These pressures result in an increased risk of misstatements in the asset accounts that are used as collateral to the loans or the accounts that are restricted by covenants. The specific accounts were not given.
Position within the Industry Canada’s three largest breweries Labatt’s, Molson-Coors and Sleeman’s are foreign owned which Big Rock tries to use to their advantage, since they are a Canadian company. Big Rock has positioned themselves within the industry as a producer, marketer, and distributor of high quality craft beer. Their strong position in Alberta is being increasingly threatened by new entrants into the market and as a result they are expanding their reach into other provinces. This industry is very competitive and highly regulated by the CRA, a liquor control agency for each province they operate in, as well as other regulatory bodies discussed further on page 15.
Economic Position Changes in the overall economic conditions have had and will continue to have a significant effect on Big Rock’s income. Beer sales across the industry have declined by 0.8% compared to the previous year; moreover Big Rock’s sales volumes have decreased by 3.3%. Management believes that this decline was caused by poor