What specific information is included in your company’s Item 1 and Item 1A of the Form 10-K?

Major Auditing Project

Note:
In order to fulfill the requirements of this course, this project must
be submitted in full. You will complete sections by individual due dates
shared in the course schedule and
the entire report is due at the end of the semester. This is a major
project; please do not underestimate the time commitment needed. It is
also worth 20% of your final grade for the course. Minimum of 25 pages
of “content” max of 30.
Description

Students will
obtain a public company’s most recent Form 10-K filing with the SEC and
prepare an analysis of business risks affecting the financial reporting
process and develop an audit plan (overview level) for the company selected.
Students
will choose a company that no other student has chosen. Their chose
will be posted on the appropriate board. The first person who posts it
gets the company so have a couple in mind in case the company you choose
is taken.
Detailed
Part One

Answer
the following questions in written paper format NOT Q&A or bullets,
written format, and do not simply copy & paste source words/work.
Remember this is a formal paper and you MUST credit your sources.

Use the posted template to organize your work and use the headings & subheadings as required in APA.
Refer
to the ESC Writing Center for APA formatting information and feedback
on your writing. (You can also submit a draft of papers to them for
review & feedback.)

Use this feedback to enhance your paper
prior to submitting for grading. Remember to prepare a formal paper
including your citations and references.

After
receiving approval for your publicly traded company, visit the SEC’s Web
site (www.sec.gov) to obtain a copy of the most recent Form 10-K filing
by a publicly held company with stock actively traded on the New York,
NASDAQ, or other over-the-counter exchanges. You may also need to
research the company’s website and other scholarly sources to fully
answer the requirements.

Answer the following questions:
Identify the company’s mission.
What is the company’s industry?
What are its primary products (its primary source of revenue)? Identify subsidiaries as well.
What raw materials does the company use?
How large is the company:
Sales (identify the locations with highest and lowest revenues, etc.)
assets (where are most housed?)
number of employees (where are they located?)
Where is the company located? Main office and other locations.
What other people/companies are closely associated with this company? Please identify all of the subsidiaries and officers.
· Examine the Form 10-K Sections Item 1 and 1A:
What specific information is included in your company’s Item 1 and Item 1A of the Form 10-K?
How might that information be useful to the audit during audit planning?
Submit only Part 1 to the appropriate Part 1 assignment upload.

Part Two

Obtain outside information about the company and the industry it operates within. (NOTE: If it is from your company’s website or company published information it is NOT “outside information”.)
Part 2 is focused primarily on the client’s industry so that you can
gain a good understanding of the industry and the key concerns within
that industry. Answer the following questions in written paper format
NOT Q&A or bullets, written format, and do not simply copy &
paste source words/work. Remember this is a formal paper and you MUST
credit your sources.

Use the posted template to organize your work and use the headings & subheadings as required in APA.
Refer
to the ESC Writing Center for APA formatting information and feedback
on your writing. (You can also submit a draft of papers to them for
review & feedback.)

Use this feedback to enhance your paper prior to submitting for grading. Submit only Part 2 to the appropriate Part 2 assignment upload.

Part 2 requirements – remember to provide analysis with each item and consider how it will impact your audit planning.
§
What are the key economic factors of the industry in which it is
housed? (Economic factors include costs of labor, government activity,
laws, policies, tax rates, labor supply, unemployment.
Where is the company in its life cycle? A company’s life cycle has four phases: start-up, rapid growth, maturity, and decline.

What are the five or six most important factors for success in this
industry? Typical success factors may be related to leadership,
strategic and tactical plans, good decision-making, effective
communication, continuous quality improvement, efficient production,
marketing and customer service. Look at the annual report and see what
the company is saying (as well as other analysts) in terms of what makes
them successful.
How does this company stand with respect to
these factors? Is the company meeting its goals? How does this company
compare to major competitors? (identify at least one major competitor
and look at their annual report or other sources for comparison of
specifics.)
Describe four or five key business risks related
to the client’s industry. (This is very important. Research this
thoroughly to find out the key business risks associated with this
specific company’s industry (one example: a global pandemic).
What notable accounting considerations are there for companies in this industry?

Confirm the Revenue Recognition Standards for the industry In the FASB
database you have access to. Identify any specific industry accounting
standards (look under INDUSTRY link) you should be aware of.

What legal or regulatory matters are of concern for this
industry? (Legal factors are external factors that can impact the
business (examples: environmental laws/regulations, discrimination laws,
consumer laws, copyright laws, health and safety laws, foreign trade
restrictions, etc.)
What social matters are of concern?
Also, is your company socially responsible? Explain how?
Do they specify their social responsibility objectives?

Does the company produce a product that creates social concerns and
publicity that could impact the profitability of the company (examples:
environmental concerns, cannabis production or selling, cigarettes,
e-cigarettes, etc.). (This item will require information obtained from
the company.)
Identify and examine the company’s internal
controls. (This item will require information obtained from the
company.) Examples: Code of ethics, employee hotline for
whistle-blowing, segregation of duties, access controls (how assets are
safeguarded), disaster recovery controls, etc.
Part Three

Analyze the company’s financial strength and compare it with two major competitors. Answer the following items in paper format NOT Q&A. Remember this is a formal paper and you MUST
credit your sources. (Apply concepts you learned in your Corporate
Finance course, use the financial ratios which help you understand the
financial strength of the company. Be sure that YOU complete the ratio
analysis and provide your interpretations. They should NOT be copy &
pasted from other sources.
Use the posted template to organize your work and use the headings & subheadings.
Refer
to the ESC Writing Center for APA formatting information and feedback
on your writing. (You can also submit a draft of papers to them for
review & feedback.) Use this to enhance your paper prior to submitting for grading.

Submit only Part 3 to the appropriate Part 3 assignment upload.

Answer the following questions:
Assess the financial strength of the company. Include the following ratios at a minimum: liquidity ratios, leverage ratios, efficiency ratios, market value ratios, profitability ratios. Share your analysis and what it means. Your audit team does NOT need
to know the formula description, they need to see your analysis (not
just the solution), results and written evaluation of what the ration
means for your client.
Assess the financial strength of the two largest competitors using the same key ratios
How does your company compare to the two competitors?
How is the financial strength of your company likely to change in the next year or so?
What are its sources of capital and what is the value of the company’s capital?
How have capital markets responded to the company in the last year? Explain.
What is the quality of earnings?
Part Four

Prepare a broad audit plan and
address the following in paper format NOT Q&A. Remember this is a
formal paper and you MUST credit your sources. This is a very important
section as it is where you demonstrate your comprehension of the course
concepts learned and applied.

Use the
posted template to organize your work and use the headings &
subheadings. Refer to the ESC Writing Center for APA formatting
information and feedback on your writing. (You can also submit a draft
of a paper to them for review & feedback.)
You will submit all parts 1-4 in a polished paper format including the new Part 4.
Here
are the Part 4 requirements, be sure to develop good analysis and
support your conclusions. This is a very important section of your paper
where you are demonstration your knowledge of audit planning and the
many concepts involved. Complete the following:

What material types of transactions and transaction cycles are
involved? Remember, analyze your research and what you know about your
company and develop a plan for your audit of this client)
What
are the high-risk areas? Would you consider any of these risks to be
significant risks? Example: how a global pandemic can impact the company
(market share, customer base, stock value, internal controls, etc.
Refer to The economic impact of COVID-19 (novel coronavirus) for more information. This is just one article that can assist you.
What are the low-risk areas?

If management faced tremendous pressure regarding the entity’s
financial performance, what opportunities might exist for them to engage
in fraudulent financial reporting? (This again is not a yes/no
response. Use your company research to develop a solid, supportable
response. Research the Code of Conduct & Ethics, etc., how do they
stack up?)
To what extent do you believe it will be appropriate to reduce assessed control risk?
How will audit effort be allocated among geographical areas?
What form of auditors’ report do you expect will be issued; what does it mean?
Schedule for Completing Term Project:
Week 2: Identify company and post on Term Project Discussion Board
Week 3: Obtain, upload, and read the 10-K report.
Week 4: Complete Part One
Week 7: Complete Part Two
Week 11: Complete Part Three
Week 14: Complete Part Four and hand the entire project in (all parts as one paper) on the due date indicated on the Course Schedule.
Mechanics
Please
use 12 point font (Calibri, Arial or Times New Roman). Each section of
the project must be submitted in .doc, docx, or rtf. format only. Do not
cut and paste material from the annual report or other sources. If
referring to specific information, please cite it appropriately, APA
format. Do not include charts without a source underneath it unless it
is your own. Minimum of 25 pages of content and no more than 30 pages.
Include
a title page, abstract, table of contents, appendices and references
(list of sources used). (These are not part of the “content”
requirements.)
Margins: 1 Inch margin
Double-spaced throughout
Please
use headings and subheadings -see the templates provided—paper should
be written in essay format (not just data on a page and NOT a list of
bulleted items, this is a paper, not lists!).
Style, Neatness, Grammar, Structure, Citing Sources will be graded in each section.
Grading
(20% of final grade) broken down as follows:
Part One Content (3%)
Part Two Content (5%)
Part Three Content (7%)
Part Four Content (5%)
Library Resources
Please use Empire State College’s Library Resources:
How to Cite Sources
How to Research
Use of Databases

Last Completed Projects