In the business arena, companies face the wrath of auditors from time to time. With the current change in the contemporary business world, it is prudent for most firms to put in place the accurate measures that will put them in the good books of auditors to avoid any court cases. Indeed, many a business entity have realised that the process of auditing can be quite traumatising especially if irregularities and illegalities are part of their activities. An in-depth look at this paper provides some of the auditing requirements and essential matters in the process of auditing as witnessed from Foursquare Industries Inc.
Auditing is the process by which professionals in the field accumulate and evaluate evidence to establish the deviation of information from the criteria that has already been found. To get the best results, it's of vital importance that the process is conducted by a professional who is competent, neutral and independent. These essential services are provided by professionals and are usually in the form of assurances on the adequacy of controls, financial statements or any guarantee.
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Question 1
In many circumstances, the introduction of a new product by an organisation elicits a lot of reactions from its customers and other interested parties. In the case of Foursquare industries Inc., their new product launch was a significant success since it got colossal acclamation and approval from its clients. On the flipside, there might be a different outcome in case auditors decide to conduct an audit of the firm (Elder, Beasley & Hogan, 2017). There may be some flaws that might emerge in record revenue during that particular year as opposed to the previous one. While conducting the audit, Tucker and Company auditors might come across some evidence that might be incriminating to Foursquare Industries. The information about them accrues revenue that year resulting from the sale of the new products might not be in tandem with their current records. Additionally, irregularities may be noted since the company might not include the fact that most of their 2018 revenue came from the sale of the new product.
In many circumstances, the introduction of new products usually affect the market price of the presenting businesses. The new products may increase the market value for Foursquare Industries by about 0.75%. The auditors may find out that the increase might have taken place during the first three days of launching the product. However, there is sometimes variation in the effect since it societies depend on some factors such as the time it is introduced, the type of industry and lastly the type of product.
Question 2
The overall capital structure of Foursquare Capital will automatically be affected in the long term as a result of their partnership with the Venture Capitalist firm. Indeed, Tucker and Company will see a difference in the financial statements of the company that will differ from those of the previous year. Their partnership with the venture capitalist firm means that they will have higher profit margins since they used the proceeds from the partnership to settle their bank loans. There will undoubtedly be a change in the audit evidence that will be obtained by Tucker and Company.
Question 3
The previous audit that was conducted by Tucker & Company that did not indicate any irregularities in Foursquare’s dealings shows that they need some vital steps. However, their change of tact confirms that the auditing firm suspected something in the manner in which the company was conducting its activities. For instance, Foursquare Incorporated might have hidden some of their previous year’s financial statements and overall revenue.
In conclusion, the auditors should respond by carefully evaluating the situation and deciding on their next cause of action. After they have gathered all the required evidence; they may determine to take legal action against Foursquare Industries Incorporated.
References
Randal J. Elde, M. S. (2016). Auditing and assurance services 16th Edition. New York: Pearson Publishers.
