Rady School of ManagementUniversity of California, San Diego
Management 132 Spring 2023
Instructor: Bruce Blakley
Term Project
Completion of this term project is a requirement for completion of the course.
The term project is due at 5 PM Thursday, June 8, 2023, our last day of class.
Each student will submit their own paper.
Each part is worth 10 points.
Use the forms on the following pages to report your work for the term project. Use as
much space as you feel appropriate to complete your answers. Please no “Pages”
documents.
As with other course work, this project is to be in your own words, not copied
material. Identical comments with other students’ submissions will be
considered not original work by both parties.
Term Project Part 1 – Public Company Reporting
This is an individual project.
Use this form to record your answers.
Name
Student ID Number
Select one public company of the following:
WD-40, of San Diego (Ticker symbol WDFC) 10-K for the year ended 8/31/22
filed with the SEC 10/24/22 and the most recent 10-Q for the quarter ended February
28/ 2023, filed April 6, 2023.
Go Pro, Inc (Ticker symbol GPRO) 10-K for the year ended December 31, 2022,
filed with the SEC February 10, 2023, and the most recent 10-Q for the quarter ended
March 31, 2023, filed May 9, 2023.
Jack in the Box (Ticker symbol JACK)10-K for the year ended October 2,
2022, filed with the SEC November 22, 2022, and the most recent 10-Q for the quarter
ended April 16, 2023, filed with the SEC in May 2023.
For the company selected, go to their web site and a web site independent of the
company that provides financial information and familiarize yourself with information
regarding the company including the Company’s annual filing on Form 10-K and
answer the following questions:
Company Name
Fiscal Year End
Industry
Exchange & Trading Symbol
Audit Firm or Firms
Financial information web site
consulted for additional reference
1. What kind of opinion has the audit firm issued on the financial statements and
the system of internal control? Does anything appear unusual about the reports
(financial statements and internal controls) from the independent auditors?
Note that for public companies, auditors are now required to include language
about “significant audit matters” in their opinions – so the auditor has to include
such topics – it does not mean that these items are “problems.”
2. Can you locate in SEC filings (not in the 10-K) what the most recent annual
audit fees are for the company?
3. What is the company’s industry and identify one unique risk factor for that
industry?
4. Identify one competitor for this company. How does the company compare
(market share, size, etc) to this competitor?
5. Identify what you think would be a specific detailed risk (do not use the terms
“detection”, “control” or “inherent” risk) in the audit of this company and describe:
(A) The audit risk,
(B) Why you think this is a risk related to the audit; and
(C) How you might change your audit procedures to address this risk. Include
references to the financial statements in your comments, and if you are making
assumptions, state those assumptions.
6. Identify a significant account grouping on the balance sheet and suggest some
procedures you think the audit team would use to complete their audit work on
these accounts. (Examples – cash accounts or accounts receivables or
inventory or some unusual asset or liability)
Part 2 Other Topics
A. Management of an audit team
The management of a team of auditors involves knowledge of professional standards
and leadership of the individuals on the team. Stress and unexpected developments
are not unusual events during an audit. The team leaders should be prepared to react
and make decisions that perhaps they have never experienced before.
Please describe what you think are appropriate actions if you were the audit team
leader(manager), and you had the following issues arise on the audit (treat them as
individual, unrelated items):
1. Your client’s business is the manufacture and sale of automotive parts that are being
supplied to electric vehicle assemblers such as Rivian. In your tour of the
warehouses and factory, it appears that the orderliness of the raw material and
finished goods inventory seem much worse than in previous years. Questions to
client personnel are met with shrugs – they have many job openings compared to
previous years and can’t fill out their staffing needs. What impact on the audit might
this information have?
2. You and your family go out to dinner at a nice local restaurant and notice a key
client’s CFO and Controller having dinner across the room with a couple of
managers and partners from another CPA firm? Do you go over and say hello? Do
you bring that information back to the office to the partners of your firm?
3. You are two weeks into the year-end audit work – four weeks to go – your staff are
not getting the client-prepared schedules consistent with the original plan and their
reasons for the delay seem to be not very specific. What do you do with this
information?
4. First week of the year-end audit work -three weeks to the target sign off date you
have four junior auditors, two senior auditors and one audit supervisor on the team.
You have already spent roughly 6 to 7 weeks in the planning and interim work at the
client’s only location. You start to hear stories that one of the junior staff and one of
the senior auditors might be starting to date each other frequently – What do you do
with this information?
B. CPA Firm Difficulty
The PCAOB web site has a section titled Firm Inspection Reports which include
summaries of all the inspections it does every year. Locate the report for the firm
of Malone Bailey (Houston, Texas) dated November 7, 2022. Summarize some
of the findings that are noted in the report. Given how many audits were
inspected, does the number of deficiencies seem to be a problem to you?
Would this have any influence on you if you were offered a position with Malone?
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