Student Loans And The American Dream - 1708 Words

Is a College Degree the Key: An Analysis on Student Loans and the American Dream These days, going to college is hailed to be the solution, the key to making something of oneself in life. It is celebrated as a part of life that will make a person successful and rich later on. A degree is essential to making one’s way up the 21st century economy. College is meant to give people a chance at the American Dream – an education, a job, money, and quite possibly a spouse. But is that promise too good to be true? With the ridiculous price tag on college today, anything less would be criminal. Unfortunately, colleges do not guarantee an education, and yet still leave students with debt in the ten thousands, which ends up negatively affecting their job opportunities, mortgage, family, well-being, retirement, and future in general. By forcing those who pursue higher education to enter the working world with crippling debt, student loans are destroying the American Dream, leaving graduates with limited and undesirable choices in all aspects of life. Straight ou t of college, with a shiny degree to speak for their accomplishments, the first thing many look for is a job – an enjoyable one with a good chance of development and increased success in the future. In reality, though, they cannot actually afford to do this. With the weight of their student loans, growing in interest every day, they are pressured to find a job, and fast. Take Jackson Solway for example, who â€Å"created an onlineShow MoreRelatedStudent Loan Debt : The American Dream Perceived By Many1294 Words   |  6 PagesStudent Loan Debt The American dream perceived by many is to obtain a college degree to have a successful life. However, many people cannot afford to go to college and are left no choice but to get a student loan. Student loans are intended to help students pay for a higher education, but is it worth the risk of being in debt? The dictatorial definition of debt in the Merriam Webster’s dictionary as a state of being under obligation to pay or repay someone or something in return for something receivedRead MoreThe Great Gatsby By F. Scott Fitzgerald1353 Words   |  6 Pagesthe rich man he had saved by staying with him and learning how to act â€Å"rich† to make himself rich and to live in his dream world. Gatsby took the opportunity and went into the drugs business or in other words bootlegged and turned from rags to riches. Just like that Gatsby represents the American dream which according to James Trusio Adams from The Epic of America is, â€Å" that dream of a land in which life sh ould be better and richer and fuller of every man, with opportunities for each according toRead MoreGraduation Speech : Millennials And College Debt 1485 Words   |  6 Pages2016 Millennials and College Debt Everyone has a dream, and in America, when someone reaches the financial and ethical position they desire to achieve, it is referred to as reaching one’s American dream. For numerous amounts of people, the American dream involves life events such as finding a stable career or job, buying a house, getting married, having children, and nurturing a future generation. While an individual’s dream may differ from another’s, most people do not want to worry ifRead MoreThe American Dream1075 Words   |  5 PagesThe â€Å"American Dream† is a concept that everyone grew up understanding and striving to achieve. However, as the dynamic of day to day life has changed, so has the attainment of that goal. Some might say that the idea of what the â€Å"American Dream† is has changed as well. Millennials are the generation that will have the most significant impact this changing ideal of success. Many factors have contributed to the evolution of this dre am determining the direction that this dream is headed and how theyRead MoreThe American Dream And The American Dream1088 Words   |  5 PagesIn American society, there are many norms that have become essential to citizenship, like owning a home or attending college to pursue higher education. The American Dream drove Americans to improve their living standards and live luxurious suburban lifestyles, but quickly it became evident that in order to achieve the American Dream, people were forced to take on debt. Mortgages, credit cards, and student loans became a part of regular conversation for the middle-class and were crucial to upholdingRead MorePost Secondary Education Comes At A High Price864 Words   |  4 Pagesto land the six-figure job is soon destroyed when students realize how much debt they obtain. Dreams of owning a house and starting a family are shattered by the money borrowed to provide and guarantee students an excellent future. Instead of waiting to land the ideal job, students work multiple jobs to help ends meet. Struggling to stay afloat, millions of students become victims of one of the major economic crisis in the United States; Student debt. According to the article â€Å"College on Credit†Read MoreStudent Debt Over The Years984 Words   |  4 Pagesland the six-figure job is soon destroyed when students realize how much debt they’ve obtained. Dreams of owning a house and starting a family are shattered by the money borrowed to provide and guarantee students an excellent future. Instead of waiting to land the ideal job, students work multiple jobs to help ends meet. Struggling to stay afloat, millions of students become victims of one of the major economic crisis in the United States today; Student debt. According to the article â€Å"College on Credit†Read MoreStudent Debt Over The Years876 Words   |  4 Pagesdebt you are in. Dreams of owning a house and starting a family is shattered by the money borrowed to provide and guarantee students a better future. Instead of waiting to land that perfect job, students are forced to work multiple jobs to help ends meet. Struggling to stay afloat, millions of students are becoming victims of one of the major economic crisis in the United States; Student debt. According to the article â€Å"College on Credit† written in â€Å"The Economist† journal, student debt over the yearsRead MoreThe Student Loan Scam Is An Interesting Book1320 Words   |  6 PagesThe Student Loan Scam is an interesting book that details all the information that people need to know about, the good and the bad. It is interesting and an easy read, but can be better understood through the use of theories. The theories we find in this book are Power Elite Theory, Karl Marx’s Surplus Populations, Monopoly Capitalism, the Education Industrial Complex, Anomie, and Labeling Theory. Power Elite Theory is one of the more predominate theories in The Student Loan Scam. This is seen mainlyRead MorePopping The Bubble : The True Cost Of Student Loans1699 Words   |  7 PagesPopping the Bubble: The True Cost of Student Loans Kyle Laffin is seen as an typical mid 20’s American. He attended college to pursue a degree in accounting and financial freedom, but this came at a cost which he didn’t imagine. He took out a loan with his father as an cosigner for a little over $100,000. Even though he got an accounting job directly out of college, he is now stuck paying back a monthly loan payment of $1,200, when he only makes $3,333 a month before taxes. This has forced his father

My Observations At The Pacific Center Mall Essay - 2206 Words

Introduction: The mall is commonly known as a social hub where people of all ages can go to meet friends, go shopping, enjoy a meal, or simply relax. With this in mind, it was the perfect spot to observe, record, and analysis any cultural norms. For this observational report, I conducted my observations at the Pacific Centre Mall on Saturday October 8th, 2016 from 1:30 pm to 4:30pm. Since it was a Saturday just after lunch time, I assumed it was going to be busy and crowded. When I arrived, my assumptions were correct as I saw a lot of people and it was fairly packed. After reading Poe’s â€Å"The man of the crowd† (1840), I was able to observe some themes from the story as well as other common characteristics which I was also to see in the mall while I underwent my observations. I was able to witness the isolation of an individual even while in a dense area. I was soon able to distinguish people based on their groups and actions like the narrator did in the stor y. I could also see the gathering of people and groups in certain areas or stores and the overwhelming presence of certain brands in the form of handheld devices and beverages, to shopping bags. Lastly, the appearance of the people circling the area over and over again. With the combinations of these themes, the mall created a dynamic where people of different backgrounds, sociability skills, and genders could blend cohesively. The Inner Isolation of an Individual: One of the groups that PoeShow MoreRelatedCommunity Health And Population Focused Nursing Practicum843 Words   |  4 PagesThe Huntington Gardens, Fuller Theological Seminary, Art Center College of Design, the Pasadena Playhouse, the Norton Simon Museum of Art and the Pacific Asia Museum (City Data, 2015). Pasadena is an ethnically diverse community. Survey estimates found 55.8% of population in Pasadena are white, 33.0% are Latino, 13.4% are African-American, 12.7% are Asian, 0.5% are American Indian and Alaska Native, 0.0% are Native Hawaiian and Other Pacific Islander, and 17.5% are some other race. This percentageRead MoreOn January 7Th, 2017, I Visited The Local New Chinatown1368 Words   |  6 PagesOn January 7th, 2017, I visited the local New Chinatown in the Central Los Angeles County. Coming from San Jose, California, this was my first opportunity to explore a part of Los Angeles besides my current residence (Westwood), and to view how interracial dynamics play into real world context. According to their website, New Chinatown had a grand opening in 1938, after the relocation of the old Chinatown, and is well known for being the first modern American Chinatown; yet, New Chinatown still retainsRead MoreShopping Mall (Research Project)10466 Words   |  42 PagesON MARKET RESEARCH ON SHOPPING MALL IN NCR A report submitted to U.P. Technical University for the partial Fulfilment of MBA Degree 2009-11 Submitted To:|Submitted By:| || Greater Noida Institute of Technology (MBA Institute), Code: 272 7, Knowledge Park-II, Greater Noida (U.P) 2009-11 CERTIFICATE This is to certify that the Research Project Report entitled Marketing Research on Shopping Mall in NCR being submitted by†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦fulfillment of the requirement of U.P.TechnicalRead MoreFeasibility Study Makeup3193 Words   |  13 Pagesgreater number of employees who visits and go to the location of the business to buy this kind of product. â€Æ' Statement of the Problem This study aimed at determining the feasibility and viability of establishing â€Å"Make Up Hub† business in N.E. Pacific Mall, Cabanatuan City. It sought answers to the following questions: 1. What marketing strategies could be taken into consideration to ensure the success of the proposed business? Who will be its target market? 2. What technical requirements shouldRead MoreEssay Windshield Survey3429 Words   |  14 PagesWindshield Survey Data Collection Grid and Paper Carletta Pope and Terra Wheeler HCS/457 July 25, 2010 Dr. Jamal, MD, MPH CERTIFICATE OF ORIGINALITY: I certify that the attached paper is my original work and has not previously been submitted by me or anyone else for any class. I further declare I have cited all sources from which I used language, ideas, and information, whether quoted verbatim or paraphrased, and that any assistance of any kind, which I received while producing this paperRead More PARADISE FLUBBED: Pynchon the New World Essay4618 Words   |  19 Pagesincreasingly difficult to prove ones craziness.Every possible guilty pleasure has its own boutique down at the Noir Center, the local mall: pricey mineral water at Bubble Indemnity, cheesey Italian food at Karmic Pizza, designer lawncare at the Marquis de Sod.Across the postered brick wall that was Orwells anti-Utopian vision, Pynchon spraypaints his own (retroactive) prediction for 1984:Mall Rules. 1984--the date by which we were all to be inmates in Big Brothers gulag.Which is worse, Pynchon asks:TheRead MoreThe Fashion Consumer’s Attitude Towards the Fashion/Lifestyle Brands Adopting Csr as a Part of Their Business Strategy9393 Words   |  38 Pagesbusiness and awareness among the people which has lead to spread of corporate social responsibility. Thus, customers are attracted towards both the brands that use CSR as their core business value and as growth strategy. But this is just a general observation about the customers. Now when companies know their duties and obligations in lifestyle/fashion industry, Indian fashion consumers are still needed to be studied about. Consumers do spend an extra penny on purchasing an FMCG product or any otherRead MoreConsumer Behavior Towards Big Bazaar15008 Words   |  61 PagesBIG BAZAR OTHER RETAIL COMPANY CERTIFICATE It is certified that the work contained in the thesis entitled â€Å"A COMPARATIVE STUDY OF MARKETING STRATEGY REFERENCE TO 4PS OF BIG BAZAR AND OTHER RETAIL COMPANY By Rajesh Kumar has been carried out under my supervision and that this work has not been submitted elsewhere for a degree. Dr. Kausik Dutta (Department of Marketing) ICFAI University, Jharkhand. Page |2 Management Thesis – 1 | 3rd Semester COMPARATIVE STUDY OF MARKETING STRATEGY REFERENCERead MoreWendys7606 Words   |  31 Pageshas yet to venture in to Europe/Asia Pacific Region. The Wendy’s Company’s major competitors are: The McDonalds Corporation, Burger King, and Yum Brands. Generally speaking the QSR Industry is extremely saturated and operates in a pure competition manor. Primary factors of importance are; Quality, Customer Service, Location, Convenience, and Consistency. In more recent years competitors have continued to expand into emerging markets such as the Asia Pacific Region, which has resulted in a substantialRead MoreOrganizational Analysis: Apple Inc. Essay5115 Words   |  21 Pagessells and creates operating system software, peripherals and delivery of third-party digital content (iTunes) to consumers. Apple sells its products and services via it 250 U.S. and 140 international retail stores worldwide (Europe, Japan and Asia-Pacific), online stores and third-party wholesalers, retailers and resellers. As of September 29, 2012 Apple has 72,800 full-time employees and 3,300 temporary employees and contractors. Apple is one of the largest and most innovative companies in the world

Company Auditing Free Essays

Group Assignment – HBC614B Company Auditing PART 1 THE INTERNATIONAL AUDITING STANDARDS BOARD AND ITS IMPORTANCE TO THE DEVELOPMENT OF AUDITING STANDARDS IN AUSTRALIA AND NEW ZEALAND The International Auditing and Assurance Standards Board (IAASB) is an independent standard setting body within the International Federation of Accountants (IFAC). Established in 1978, originally known as International Auditing Practices Committee (IAPC), it changed its name to IAASB in early 2001 and was then reformed by IFAC in 2003. IAASB puts public interest first and aims to improve the quality and uniformity of practice throughout the world and to strengthen public confidence in the global auditing and assurance profession by facilitating the convergence of international and national standards. We will write a custom essay sample on Company Auditing or any similar topic only for you Order Now IAASB is committed to achieve its objectives through the following works: †¢ Developing Standards – establish high quality auditing, review, other assurance, quality control and related services standards, such as International Standards on Auditing (ISAs). Global Acceptance Convergence – promote the acceptance and adoption of IAASB pronouncements throughout the world and support a strong and solid international accountancy profession by coordinating with IFAC member bodies, regional organisations and national standard setters. †¢ Communication – encourage debate and present papers on a variety of audit and assurance issues and increase the public image and awareness of the activities of the IAASB. To date, the IAASB has earned increasing recognition for the quality of its standards and the credibility of its standard setting process. This has contributed to the increasing use of its standards worldwide. Over 100 countries are now using or are in the process of adopting ISAs into their national auditing standards. For investors in international capital markets, the quality of audit reports and audit opinions on financial reports are crucial when they make decisions about capital allocation. Audits, working within internationally accepted auditing standards, increase the credibility and reliability of the financial information provided in the financial reports. As Australian capital markets are increasingly linked with overseas markets, it is important to have a globally standardised financial reporting framework that is supported by globally accepted auditing standards. The Australian Auditing and Assurance Standards Board (AUASB) made the compliance with IAASB standards easier via a long-standing policy of convergence and harmonisation with ISAs. The AUASB uses ISAs as a base to develop Australian Standards on Auditing (ASA). For any revision and enhancement of ISAs initiated by the IAASB, the AUASB will make appropriate consequential amendments to ASA. The AUASB and IAASB generally issue an exposure draft of a proposed auditing and assurance standard concurrently for consideration by interested parties. In New Zealand, New Zealand Auditing Standards (AS) and Audit Guidance Statements (AGS) are also based on ISAs and International Auditing Practice Statements (IAPS). The New Zealand auditing authority adopts the IFAC documents and amends them only as necessary to achieve its – 1 of 11 – Group Assignment – HBC614B Company Auditing objectives. Amendments to the IFAC documents may be made to reflect specific New Zealand legislative requirements or to reflect specific audit practising arrangements within New Zealand. As we can see, for years since IAPC or IAASB was established, it has played a very important role in enhancing and standardizing the quality of auditing and assurance services around the world. ============================= – 2 of 11 – Group Assignment – HBC614B Company Auditing PART 2 CO-REGULATION OF AUDITING PRACTICE IN AUSTRALIA In most developed countries, including Australia, the auditing regulatory framework is provided, at least to some extent, by government through legislation and government agencies. In the past, however, the auditing profession in Australia was largely self-regulated through the rules and requirements self-imposed by the principal players in the field, i. e. auditing firms and auditing professional bodies. As a result of the Corporate Law Economic Reform Program (CLERP) 9, the Auditing and Assurance Standards Board (AUASB) became a statutory (government) body. Since April 28th 2006, the Australian Auditing Standards (ASAs), which have been released by AUASB for purposes of section 336 of Corporation Act 2001, have Force of Law. The Financial Reporting Council (FRC), a statutory body under the Australian Securities and Investments Commission Act 2001 (ASIC Act), is responsible for providing broad oversight of the process for setting accounting and auditing standards as well as monitoring the effectiveness of auditor independence requirements in Australia. Yet the control and enforcement mechanism of these standards is also supported by the auditing profession represented by two primary professional accounting organisations: CPA Australia and the Institute of Chartered Accountants in Australia (ICAA). Although the membership in these two organizations is voluntarily, it is still a necessary condition to get registration as a Company Auditor or a Liquidator. Some methods of control of quality of the auditing services imposed by these professional organisations include peer reviews, continued professional development and periodical rotation of the auditors. There are also disciplinary procedures in place to encourage improved ethical behaviour and quality of service provided. This particular model of co-existence of government regulation and industry self-regulation in Australia is called ‘co-regulation’ of auditing practice. Co-regulation provides ‘interactions that produce pressures for the refinement of regulatory structures in terms of openness, consultation, independence and speed of response to urgent accounting problems’ [Malcolm C. Miller]. ============================= – 3 of 11 – Group Assignment – HBC614B Company Auditing PART 3 QUESTION 6. 3 – ASA 315 UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT – HOMECHEF PTY LTD. A first and very important step of the audit process involves the auditor gaining an early understanding and knowledge of the client’s business. In fact, ASA 315 requires that this step is carried o ut during the audit planning stage. The auditor must obtain or update their understanding of the client’s operations and circumstances, including its organisational structure, management policies, the company’ position in its industry, the economy and its legal obligations. ASA 315 provides extensive guidance on matters related to obtaining an understanding of the entity and its environment, which may be classified into three main categories: (1) Internal control / organisational structure (2) Operational and legal structure (3) Industry and economic conditions An understanding of these three elements helps the auditor assess the client’s business risk and identify the events, transactions and practices that may have a significant effect on its financial report. This report presents a recent review of the operations and circumstances of one of our clients, HomeChef Pty Ltd. in accordance with the requirements of ASA 315. The main objective was to identify the events and developments at HomeChef which may have a significant bearing on the company’s business risk and consequently affect our audit. This understanding will help us plan and perform the audit more efficiently and effectively and will ultimately improve the services we provide to our client. HomeChef Pty Ltd has been the market leader in the boutique food and beverage industry for the last two years. The company manufactures, supplies and retails quality ingredients for use in the home kitchen and small restaurant market. During the review our audit team identified a number of major events/transactions that may have a significant impact on the business and affect our audit process. Below is a brief discussion on each of these events/transactions: 1) New products and services: Recently, HomeChef introduced ‘pre-packaged’ meals suitable to be served at a dinner party. Preparation of the ‘ready to serve meals’ would require extra steps to produce the final product. This would involve more processing facilities, more staff and more advertising. One potential related business risk might be the increased product liability. There may be extra compliance requirements from the Food Safety Regulators. There could also be risk that the demand has not been accurately estimated. The company’s capital and current expenditure may increase significantly because of the launch of the new product. This situation tends to increase our audit risk. The auditor, therefore, should carefully consider how this changing operating characteristic may affect his/her auditing process. For example, he/she may need to review some Food Safety Regulation requirements to assess that correct amounts of expenditure is attributed to this particular type of compliance; or refer to some industry literature to get a better understanding of the niche market for this type of product. Reviewing – 4 of 11 – Group Assignment – HBC614B Company Auditing sales figures and sale forecasts may also help to assess to what degree the company’s business risk may be affected by this new development. 2) New lines of business: HomeChef has recently opened a number of small cafe where customers can sample the s company’s product range. By doing so, the company is venturing into unfamiliar territory. In addition, the notes of HomeChef’s draft financial report reveal that the company has entered into agreements for building and developing a new entertainment complex. These events indicate not only changes in the company’s operational structure, but also those relating to its environment. New opportunities bring new risks. As this is HomeChef’s first venture into a new business area, lack of expertise and experience could be a real concern. The hospitality industry operates quite differently from the food manufacturing. There could be many more competitive forces and regulations in place. This move could change the organisational/operational structure of the company drastically. For example, new divisions may need to be established and the company hierarchy changed. Apart from the potential risks of increased product liability and inaccurate demand estimates, similar to the case of all new products, this could introduce new risks associated with the company’s internal control. Also, the company’s potential business risk would increase its inherent risk. In general, this event is likely to increase our audit risk. It is very important that the auditor familiarises him/herself with the company’s new operational structure, the industry conditions and regulatory environment related to this new line of business. Reviewing the hospitality industry publications and significant industry legislation may assist with basic understanding of how the company business risk is affected by this move. Aggressive marketing and acquisition strategy – Rapid growth: Over the last two years HomeChef has acquired a number of smaller competitors and become the market leader in its industry. This is an indication of the company’s aggressive approach to expansion and growth. In such situations, it is often noticed that a company’s infrastructure is likely to lag behind in the process. In a hurry to expand, the organisational structure of the company may be changing too fast. There could be staff members with insufficient experience, the IT system may not cope well under the new conditions as new procedures and processes are added in. This significant and rapid expansion of operations could create strain and increase the risk of a breakdown in controls. The auditor needs to discuss with the senior management and gather evidence from the company’s documents to assess this risk. He/she may need further understanding of the current cycle in the industry, to assess how this ‘acquisition spree’ could affect HomeChef’s business risk, and consequently the audit risk. Reviewing government statistics, trend forecasts, trade journals and financial newspapers may help improve the auditor’s understanding of the industry in general and the business in particular. Changes in key personnel: The departure of a key executive (HomeChef’s finance director), probably with a significant loss of corporate history and experience, may also have an impact on the business. The new finance manager has been with the company for less than a month and may take some time to gain the knowledge and understanding of the business. He may have a different focus or 3) 4) – 5 of 11 – Group Assignment – HBC614B Company Auditing understanding of the company’s internal control. The auditor should take this factor into account when assessing the risks of misstatements associated with the company’s financial report which, possibly, has been prepared under the instructions of the new finance director. 5) Newly-established internal audit group: HomeChef started using the service of an internal audit group for the first time this year. Generally, the existence and operation of an internal audit group indicate the commitment and serious consideration given to maintaining high standards of internal control by the management. This would normally reduce the control risk in a business and subsequently reduce the audit risk. In addition, the external auditor could, to some extent, use the work of an internal auditor, after having gained knowledge of and satisfied with the scope of internal auditing and the audit team’s technical competence and professional care. However, in this case, as HomeChef’s audit team is new, careful considerations are required if the auditor is to rely on the internal team’s audit work. Installation of a significant new IT system related to financial reporting: HomeChef switched to a new computer system early this year. The system was installed by a professional computer company and the old and new systems were run parallel for 3 months. Some new functions/modules have been introduced in the new system, including the ability to process stocktake results, account payable invoices and payments at the store level. This event highlighted a major change in one of the company’s internal control components. It seems that the new system is rather reliable as a systematic testing plan and an integrity checking process were carried out by the professional computer company and there have been no major problems with the system so far. The use of this new system could potentially decrease the company’s control risk. The audit strategy could focus on test of control. A proper and systematic testing plan on the new system is recommended, especially on the new modules for stocktake and accounts payable process. Significant amount of non-routine/non-systematic transactions: HomeChef’s draft Income Statement includes an ‘extraordinary item’ of $231 million without any notes or explanations attached to it. The existence of this ‘extraordinary’ loss would certainly have a significant impact on the business and would increase the audit risk considerably. This particular transaction requires a significant amount of attention by the auditor. Enquiries should be made to understand the nature and extent of all relevant details of this transaction. This would help the auditor assess if the transaction is legal, not dismissing the possibility of fraud, or errors, such as transactions recorded without substance, intentional misapplication of accounting policies, mathematical mistakes, oversight or misinterpretation of facts. The auditor should also examine if the valuation and allocation of the amounts have been done correctly. Company records and legal documents will need to be reviewed. An extensive substantive audit approach would be suitable for this particular area of the audit. Debt structure – Covenant agreement: Note (e) to the draft Financial Report reveals that a covenant agreement exists between HomeChef and its bank. The bank loans are secured against the company’s remaining property, plant and equipment. This agreement specifies that the company should maintain a 6) 7) 8) – 6 of 11 – Group Assignment – HBC614B Company Auditing positive net tangible asset ratio and a positive current ratio. Given the large amount at stake, there is a great incentive for the company to falsify, alter and manipulate figures to achieve these positive ratios at any cost. This situation would increase HomeChef’s business risk significantly and consequently increase our audit risk. The audit plan could focus on substantive testing of the accounts related to the current ratio and net asset ratio. The auditor must exercise reasonable care and skill and maintain an attitude of professional scepticism throughout the audit. Based on HomeChef’s financial ratios being adverse and the subsequent difficulty in complying with the terms of loan agreements, the auditor may need to raise a going concern issue. It would be necessary for the auditor to discuss this problem with HomeChef’s management so that appropriate measures could be taken by the company to overcome this situation. As a result of reviewing HomeChef’s operations and environment, including its financial and marketing position, using the precepts of ASA 315, our audit team has been able to update our knowledge of the company’s situation and assess our audit risk accordingly. This understanding and assessment will direct the development of our strategy and plan for the audit of HomeChef. ============================ – 7 of 11 – Group Assignment – HBC614B Company Auditing PART 4 QUESTION 6. 22 – IMPACT OF BUSINESS RISK ASSESSMENT ON AUDIT STRATEGY This report presents a short case study of Weave Limited. The main purpose of the case study is to look at how Business Risk impacts on Audit Risk, and consequently, on Audit Strategy and Plan. Weave Limited is a closely held private c ompany, manufacturing high-quality woollen cloth. It has been in operation for almost 60 years and the CEO of the company is also its major shareholder. Currently, the company is under a great financial stress due to increased competition and falling sales volume. Three years ago the company was sued for dumping chemical pollutants into the local river. As a result, a settlement was signed with the Environmental Protection Agency providing that Weave construct a water treatment facility within five years. Our Audit Firm has been auditing Weave for the last ten years, and the current year interim audit revealed that there has been virtually no activity in the Water Treatment Facility Construction account in the current financial year. To prepare for this year audit we need to take the following steps: (1) review the company’s business risk i. e. the risk that Weave’s business objectives will not be attained due to the above-mentioned pressures and, ultimately, the risk associated with its profitability and survival. (2) assess the implications of the company’s business risk on our audit risk (3) develop our audit strategy and audit program in response to the assessed risks. In order to assess Weave’s business risk, we felt that a PEST analysis would be the most appropriate approach. It involves identifying the political/legal, economic, social and technological influences on an entity. †¢ Environmental Protection Laws may have a heavy toll on the business. Compliance with these Laws (such as building a water treatment facility) may be very expensive, but non-compliance may actually have a suicidal effect on the company. †¢ Economic risk should also be taken into account. Increased competition and limited market for Weave’s high quality and possibly expensive products could pose a serious threat to the company’s profitability and ultimately its very survival. Social risk component is also present in this case. The surrounding area is poor and unemployment rate is high. The company’s management may feel a social pressure to provide employment at any cost. The obligation to build a water treatment facility could be very expensive and resource-consuming. It is not an easy task to estimate or to make provisions for the resources require d to meet this obligation. It is even harder to estimate the costs of not meeting this obligation. This adds unusual pressure on the management. Potential incentives could arise for management to understate the company’s profit/cash flow to use as an excuse in an attempt to avoid fulfilling this particular liability. This situation is likely to increase Weave’s inherent risks. – 8 of 11 – Group Assignment – HBC614B Company Auditing In assessing the company’s control risks, certain observations and issues have come to our attention which suggest an unsatisfactory internal control system: †¢ The company’s CEO is also its major shareholder who seems to be a strong character that has the overriding authority and decision making power. The CEO does not seem to take the compliance with the conditions imposed by the Government’s Environmental Protection Agency seriously. He decided to stop work on the water treatment facility as he thought that the State would not fine or close the company down for non-compliance. †¢ The company does not seem to have any risk assessme nt policies or procedures for dealing with business risk. Based on the above findings, the audit team agreed that Weave’s business/inherent risks and control risks could be assessed as high. This conclusion has had an impact on our audit strategy and audit plan. As we believe that the control risks are high, an audit strategy of a predominantly substantive approach has been adopted. We do not plan to obtain a thorough understanding of the company’s internal control or to carry out tests of control. Instead, we plan extensive substantive audit procedures based on a low to medium acceptable level of detection risk (depending whether the assertions under examination are at risk). In response to the high level of inherent risks, we decided to assign more experienced audit personnel and to conduct the audit with a heightened degree of professional scepticism. As mentioned earlier, an accurate assessment of the extent of liability related to the breach of the environmental laws is not easy to achieve. As the company’s management does not seem to recognise the seriousness of this risk or to respond to it properly, we decided to engage environmental and technical experts to assist by providing us with legal/environmental opinion and estimates. The engagement of an environmental consultant will be scheduled to happen before the year end audit. Weave’s increased inherent risk and control risk increase our audit risk. Some assertions in the company’s financial reports have been identified as the key audit assertions as they tend to be more at risk. These assertions will be examined closely (please refer to the matrix below) and more efforts will be focused on obtaining sufficient and appropriate evidence to test these assertions. Financial Acct Liability Acct (provision for water treatment facility) Contingent Liabilties Valuation of the provision Sales Acct (Income Statement Assertions) Completeness all sales recorded Accuracy of recorded sales amounts Correct accounting period cut-off Inherent Risk Control Risk Debtor’s confirmation Assertions at risk (Balance Sheet Assertions) Completeness of all liabilities Inherent Risk Engagement of environmental expert/consultant Quotation / project estimations are recorded properly with appropriate amounts Audit Risk Procedures/Evidence 9 of 11 – Group Assignment – HBC614B Company Auditing To test if the liability account for the water treatment facility contains any material misstatement we will focus on whether the account has included all liabilities as per the environmental specialist’s advice and the amounts are properly estimated and recorded (completeness and valuation). We could do this by seeking confirmation from the environmental specialist and checking estimates/quotations for the project. To support the company’s claim of ‘low sales volume’ and ‘low level of cash flow’, we will test if all sales transactions pertaining to the company have been included in the income statement (completeness) and all sales occurred during the current accounting period have been properly recorded with the correct amounts (accuracy and cut-off). Collecting debtors’ confirmations could be the approach to carry out this test. As our team has audited the company for the last ten years, it is assumed that there must be a certain degree of familiarity and complacency. However, due to the new developments in the company’ situation, more specifically, higher level of business risk, this year’s audit strategy and plan have been revised accordingly. Apart from additional audit procedures and probably a larger sample size, our team will need to maintain a higher level of professional scepticism to make sure that the company’s accounts contain no material misstatements. It should be noted that had this audit been undertaken in the seventh year after the signing of the settlement with the Government’s Environmental Protection Agency, the situation would be different. As the condition of the settlement to build a water treatment facility would have been breached by now, there is an imminent threat of the company being closed down by the government. A ‘going concern’ assessment at the planning stage (as required by ASA 570) would provide the following going concern problem indications: (1) increased competition and falling sales, (2) noncompliance with statutory requirements, and (3) legal proceedings against the entity. In cases where going concern is related to cash flow or solvency problems, some mitigating factors could be considered (such as sale of assets or additional contributions by owners). However, in this case, it could be judged that a going concern basis is not appropriate as the business is now subject to closure by government regulation enforcement. We, as the auditors, would need to discuss ways to deal with the problem with the company’s management. The possible outcomes could range from renegotiating the settlement agreement to making the decision to liquidate. In the latter case, the auditors would have to assess the impact that a forced sale of assets would have on the book values and the classifications of assets. The auditors would also need to assess the amount and classification of liabilities, including any provision for staff termination payments and other closing-down expenses. In any way, if going concern is an issue it should be adequately reflected (disclosed) in the Financial Reports. The Auditor’s Report should also include an ‘emphasis of matter’ [ASA701. 09 ASA570], clearly stating that there is a significant uncertainty regarding a going concern problem. ============================= – 10 of 11 – Group Assignment – HBC614B Company Auditing REFERENCES: 1. 2. Australian Auditing and Assurance Handbook, 2007 Edition, CPA Australia Australian Government’s Financial Reporting Council 2005, Australian Government’s Financial Reporting Council, viewed 20 May 2008, http://www. frc. gov. au/about 3. Brief History 2008, International Auditing and Assurance Standards Board, IAS Plus, Deloitte, viewed 18 May 2008, http://www. iasplus. com/ifac/iaasb. htm 4. Chris Pearce, Parliamentary Secretary to the Treasury, 22 November 2004, â€Å"The future of governance regulation in Australia, Address to the 21st National Conference of Chartered Secretaries Australia†, viewed 19 May 2008, http://www. reasurer. gov. au/DisplayDocs. aspx? doc=speeches/2004/001. htm=005=cjp=20 04=1 5. Gay Simnett, 2007, ‘Chapter 6 Planning, Knowledge of the Business and Evaluating Business Risk’, Auditing and Assurance Services in Australia, revised edn 3, McGraw-Hill Australia Pty Ltd. 6. International Auditing and Assurance Standards Board 20 08, IFAC, viewed 18 May 2008, http://www. ifac. org/IAASB/ 7. James M. Sylph, January 14, 2005, â€Å"Global Convergence – Near or Far? †, American Accounting Association Auditing Section 2005 Mid Year Conference How to cite Company Auditing, Papers

Case Study for Global Crisis Managementâ€Toyota

Question: Describe about the Case Study for Global Crisis Management Toyota. Answer: Definition of Product-Harm Crisis Product- harm crisis refers to when the products of a company are said to be faulty, dangerous and unsafe to the consumers (Samaraweera Qing, 2014). A product crisis can affect the whole product type or a subcategory of the product and mostly leads to a product recall voluntarily or the government regulators can force the recall. In the case of Toyota, its product harm-crisis was triggered by accident that was caused by a Toyota Lexus when its accelerator got stuck, and the vehicle crushed killing four people. Product crisis has short term effects which could be lost sales and product recall costs. In the long-term, the crisis would damage the reputation of the company. Problems Toyota Leaders Must Solve The leaders of Toyota have to restore its companys reputation and consumer loyalty. Consumers across the world react differently to product harm crisis. Research shows that consumers tend to get over a crisis and its effects if the company announces a voluntary recall and is publicly responsible for its product (Sakurai, 2011). Toyota recall was forced by the government, and this had a negative impact on the Toyota reputation. The public did not believe the explanation given by the company, and this has upheld public trust (Lei, Dawar, Grhan-Canli, 2012).Negative effects on the company. The major challenge facing Toyota is to Organizational Successful and Unsuccessful Changes Digitization of the automobile is a threat that is associated directly with the recall. With advanced computers, automobile manufacturers have adopted computerized systems to regulate and enhance the functioning and performance of the vehicles. During previous Toyota recalls, the company had promised to develop a database that would show defects and report them so that it could monitor customer complaints that are vehicle-related in a fast way (Rajasekera, 2013). The current recall reviewed that the company did not create the database, or it did not give much attention to the information collected by the database in a well-timed manner. This situation may be a new opportunity to a company that has the means to observe and respond to customer complaints in time. This is a problem the leaders at Toyota need to address to maintain its market share and to avoid the situation that happened to Sony. The power of social media was brought to light by the crisis. Media has a significant effect on the crisis management. Toyota had realized the importance of the social networks earlier, and it has added fans on Facebook during the crisis. However, observing a company's performance on a social network does not show everything. Toyota needs to watch its competitors. The analysis shows that Hyundai, an automobile company from Korea, has increased its fans on social networks at a high rate. There must be a cause of this increase, and Toyota needs to discover what it is. Monitoring the trends of competitors is vital for any company as it helps the company to have a competitive advantage against its competitors (Rajasekera, 2013) Product-harm crisis leads to a brand crisis that would lead to losses in sales volume and market share (Cleeren, van Heerde, Dekimpe, 2013). This is one of the major crisis that Toyota leaders have to solve. After the recall, the stock prices of Toyota started dropping drastically. However, the effects on the stock price were not so overwhelming because they started to rise immediately after the Toyota president Akio attended the US public hearing in February 2010 (Rajasekera, 2010). Organizational change can be challenging to implement, and this may determine if is successful or unsuccessful. Toyota's organizational change that was unsuccessful was the use of a defect-reporting database to monitor customer complaints. In one of the statement presented to the U.S. Congress, the Toyota president, Akio Toyoda said the growth rate of Toyota was increasing at a high rate, and they focused on increasing the sales of cars rather than giving attention to quality and customer complaints. However, use of social networks by the company was a success. The company has added its fans on Facebook even during the crisis. Media can be of significant help to a company in crisis management. Recommendations The first recommendation would give use of social network sites. A company can use social media to disseminate company message to the public, and if properly used, it can help keep an eye on the public. People rely more on social networks such as Facebook and Twitter during the crisis. By tapping on the social networks, one can get real-time information from customers and competitors. Toyota could also use the internet to develop software and database that monitor and report defects and the customer complain. With the use of this database, Toyota will be able to act on its customer complaints more efficiently. Secondly, Toyota needs to emphasize on its quality of vehicles rather than the volume of sales they make. To win its customer and public trust back, they must produce automobiles of higher quality and avoid any future recall. Digitization of automobiles can be a way to monitor and maintain quality in the vehicles it produces. References Cleeren, K., Van Heerde, H. J., Dekimpe, M. G. (2013). Rising from the ashes: How brands And categories can overcome product-harm crises. Journal of Marketing,77(2), 58-77. German, F., Grewal, R., Ross Jr, W. T., Srivastava, R. K. (2014). Product recalls and the The moderating role of brand commitment.Marketing Letters, 25(2), 179-191. Lei, J., Dawar, N., Grhan-Canli, Z. (2012). Base-rate information in consumer attributions of Product-harm crises.Journal of Marketing Research,49(3), 336-348. Rajasekera, J. (2010). Crisis management in social media and digital age: Recall problem and Challenges to Toyota.International University of Japan Graduate School of International Management Working Paper No. IM-2010-02. Rajasekera, J. (2013). Challenges to Toyota caused by recall problems, social networks and Digitization.Asian Academy of Management Journal, 18(1), 1-17. Sakurai, M. (2011). The impact of Toyota Recalls on Corporate Reputation. International Management19(1), 73-89. Samaraweera, G. C., Li, C., Qing, P. (2014). Mitigating Product-Harm Crises and Making Markets Sustainable: How does National Culture Matter? Sustainability,6(5), 2642-2657.