ACCT 6371 Audit Project
Analysis and Audit Plan
Detailed Instructions
Part I Gather information
1. Obtain a copy of a recent annual report of a publicly held company with
stock actively traded on the New York, NASDAQ or other over-the-counter
exchanges. Answer the following questions:
a. What is the company’s industry?
b. What are its primary products?
c. What raw materials does the company use?
d. How large is the company:
 sales
 assets
 employees
e. Where is the company located?
f. What other people/companies are closely associated with this
company?
g. Look at the annual report:
 What image does it intend to convey?
 What are the segments and functional contents of the report?
2. Obtain outside information about the company and its industry. Answer
the following questions:
a. What are the key economic factors about the industry?
b. Where is the company in its life cycle?
c. What are the five or six most important factors for success in this
business?
d. How does this company stand with respect to these factors?
e. Describe four or five key business risks related to the client’s
business and industry.
f. What notable accounting considerations are there for companies in
this industry?
g. What legal or regulatory matters are of concern?
h. What social matters are of concern?
Part II Perform financial analysis and prepare a broad audit plan
3. Analyze the company’s financial strength:
a. Assess the financial strength of the company?
b. How is the financial strength likely to change in the next year or so?
c. What are its sources of capital and what is the value of the
company’s capital?
d. How have capital markets responded to the company in the last
year?
e. What is the quality of earnings?
f. How does the company compare with others in the industry?
4. Prepare a broad audit plan:
a. What material types of transactions and transaction cycles are
involved?
b. What are the high-risk areas?
c. What are the low-risk areas?
d. If management faced tremendous pressure regarding the entity’s
financial performance, what opportunities might exist for them to
engage in fraudulent financial reporting?
e. To what extent do you believe it will be appropriate to reduce
assessed control risk?
f. How will audit effort be allocated among geographical areas?
g. What form of auditors’ report do you expect will be issued; what
does it mean?