Audit Program (Apple Inc.) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Audit Program (Apple Inc.) Case Study Help

Introduction

This audit engagement processes bearing an inspection by using the monetary reports of Apple Inc., the main and key impartial of this audit process is to precise a finding on the neutrality of the financial statements in the agreement with the (CAS) “Canadian Auditing Standards”. All the financial data and financial statements of the organization are taken from the annual report of the year 2022, Sep 24. These monetary reports have been organized resulting in the (IFRS) and are the accountability of the administration of the company.

Identification of Financial Statement Risk

As a portion of the audit preparation process by using the monetary reports of Apple Inc., one of the most identified monetary statement risks is material misstatement as significant risk. The other probability of occurring hazards in the organization is (theft of assets, unrecorded transactions, and inappropriate journal entries). To address this risk, developed a set of audit procedures that are designed to get adequate suitable audit indication to upkeep audit opinion. The risk of material misstatement in inventory valuation due to potential errors or irregularities in physical inventory count, valuation, and estimation of inventory obsolescence. The following is an explanation of the risk using the logic of the COSO cube from chapter 7:

Apple Inc. is a large company with a complex supply chain, which presents a high risk of errors and fraud in inventory valuation and quantities. The technology business is branded by quick technological improvements and small merchandise lifespans. Therefore, there is a risk that Apple's inventory may become obsolete or lose value quickly, leading to overstatement or understatement of inventory. Apple's inventory management system involves a complex network of suppliers, warehouses, and distribution centers, which presents a risk of errors and discrepancies in inventory records.

Inventory is a significant account in Apple's financial statements, and any misstatement can have a material impact on the financial statements. Also, inventory valuation requires a significant amount of judgment, which can introduce errors or biases. Apple must comply with various accounting standards, such as IFRS and US GAAP, which guide inventory valuation and disclosure requirements. Any non-compliance with these standards can lead to regulatory sanctions and reputational damage.

The mainly identified risks in the organization are theft of assets, unrecorded transactions, and inappropriate journal entries that eventually lead to one of the high risks, which is a material misstatement. Theft of assets is considered a risk because it can lead to a significant financial impact on the company's financial statements.

If assets are stolen, the company's balance sheet will be misstated, which could lead to a material misstatement in the financial statements. This risk is considered a risk because it can lead to a material misstatement in the company's financial statements. If transactions are not recorded accurately, the company's financial statements will be misstated, which could lead to a loss of credibility in the financial reporting process.

This risk is considered a risk because it can lead to a material misstatement in the company's financial statements. If journal entries are not recorded accurately, the company's financial statements will be misstated, which could lead to a loss of credibility in the financial reporting process. Additionally, inappropriate journal entries may indicate weaknesses in the company's internal controls over financial reporting.

Assessment of Risks

The assessment of risk is identified on three different levels, which first includes The inherent risk for inventory valuation is assessed as moderate (50%) due to the industry’s nature with inherent limitations and high competition, leading to potential fluctuations in demand, supply, and pricing.

Second, the control risk is assessed as low (25%) due to the effective internal control measures implemented by Apple Inc. to mitigate inventory-related risks, including strong inventory management systems and procedures, regular inventory counts, and segregation of duties. Given the inherent and control risks assessed, the detection risk is assessed as moderate (40%) to ensure that the overall audit risk is maintained at an acceptable level.

The selection of each risk assessment and reference to CAS/GAAP rules is based on a thorough analysis of the company's financial statements and related documents. The purpose is to identify and assess the risks that may affect the company's financial statements and to design audit procedures that can effectively address those risks.

In the case of Apple Inc., the risk assessments were based on various factors, such as the nature of the company's business, its accounting policies, and the potential impact of external factors. The references to CAS/GAAP rules were made to ensure that the audit procedures comply with the relevant accounting standards and guidelines..............

Audit Program (Apple Inc.) Case Study Help

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