Jared Talavera
Professor Jeff Bacsik
ACCT 400-02
November 4, 2022
Audit Analytics Paper
From the get-go of this assignment, I had no clue of what to do. Eventually, after reading and re-reading the instructions, I understood what I wanted to do and how exactly to go about it. In the directions, it states that I could do my assignment on whichever industry of my choosing. In the end, I chose the soft drink (soda) industry because I enjoy sipping a can of Dr. Pepper and other soft drinks (sodas), especially during the summer, which aided me in officially commencing my Audit Analytics assignment.
The first issue that I encountered was hunting for and finding potential soft drink (soda) clients of Ernst and Young, Deloitte, and KPMG, I decided to dedicate a huge chunk of my time to trying to find a prospective PWC client. After looking for several hours on various online sources, I emailed my diverse colleagues, asking for suggestions for looking for a PWC client. One of them answered as soon as possible and explained that I could always utilize another client of theirs that sold other drinks or something semi-relevant to soft drinks (soda). At the end of it all, I had Coca-Cola for Ernst and Young, Pepsi for KPMG, Keurig Dr. Pepper for Deloitte, and Campbells for PWC. Even though it was strenuous work for me, it did enhance my knowledge of the audit process by demonstrating to me that it requires many, many attempts (not to mention, a lot of patience) to ultimately figure out the answer, and sometimes, when all else fails, one has to improvise in order to reach the ultimate goal.
With that being said, the 2nd stumbling block that I ran into was calculating the clients’ ratios. Coke, Pepsi, and Keurig Dr. Pepper all possessed both 2019 and 2020 as their most recent years, but Campbell’s had utilized both 2021 and 2020 as their most recent years. In order for all of them to match up, I decided to utilize the numerical data of both 2020 and 2019 for Campbell’s. As one can imagine, additional problems had taken place while I was engaged in the process of figuring out the ratios. Something told me that these drawbacks were there to challenge my comprehension by demonstrating to me that problems will inevitably arise when engaged in the process of finding the correct numbers and calculating the correct ratios, but one must be creative, have a lot of patience, and be willing to work hard in order to work their way around those stumbling blocks for the client.
The next situation that I found myself stuck in was calculating the amount of time required for thoughtful and thorough analysis. As I was looking through the clients’ 10-Ks, I took it upon myself to dedicate some time to searching where all the information that I required to do the assignment was located. It needed careful study and analysis to realize which information was the most relatable to this Audit Analytics assignment.
Then, I had to look for and realize the potential risks that the companies face. Ever since COVID-19, firms have assumed more risks from the virus. I assumed that was all the companies’ major risk. Another vital risk since COVID-19 is a massive lack of available and willing labor. There were many risks to go through on the clients’ 10-Ks, and although it took me some time, I was able to successfully pick and choose the ones I thought were the most serious for the firms. It required nothing but subjective judgment in order to pick the most crucial risks.
Another part of this project that required a good 2/3 of my time was coming up with the three questions for the Chief Risk Officer of one of the firms. It took me a moment to completely comprehend what the assignment was asking of me, and it was time-consuming to come up with the three questions. Nevertheless, I finally determined the three questions: “How much do they rely on the third party?; What are the increases in raw materials that they use?; How much in any way did the pandemic hurt them?”
Another requirement that the instructions mentioned was to find and read the report of assessment of Internal Control over the Financial Reporting (ICFR) system. I had used up some of my time to peruse the 10-Ks to figure out where each and every company had its respective assessment and the firm auditor’s assessment of ICFR. I needed to realize if the company’s internal assessment and the firm auditor’s assessment match. For the four companies, the assessments agreed uniformly. What made my realization somewhat difficult was the fact that there was different wording. The management’s assessment stated “effective,” while the company’s report mentioned, “fairly effective.” They were not very distinct from each other, therefore I presumed that they agreed. This analysis as a whole helped to further develop my comprehension by explaining that auditors that are from diverse firms will utilize different wording in order to say the same things.
In the excel sheet, I demonstrate the ratios for the four companies, which of the big four firms they belong to, their major risks, whether or not the two ICFR assessments agree, and the three questions for one of the firms (and that one firm is Deloitte). In this report essay, I discussed what I did and how I went about it for this Audit Analytics assignment. I disclosed what problems I ran into and surpassed in this assignment and how they improved my comprehension of the auditing process in its entirety. In summation, I had fun surpassing the problems I ran into despite the setbacks. I found it to be advantageous to have to creatively think one’s way out of the problems that auditors would typically run into.
For each of these 4 clients, what are the following financial ratios FOR THE LATEST TWO YEARS SHOWN:
- Debt/total assets
- Debt/Equity
- Gross Margin Percent
- Inventory Turnover
- Working capital
- Current Ratio
- Quick Ratio
This information must be inserted in an Excel File.
Question: Regarding all of the information above, how do I generate the debt/total assets, debt/equity, gross margin percent, inventory turnover, working capital, current ratio, and quick ratio from the companies that I had mentioned above?
