A Hong Kong listed company has over 80% voting shares being held by the Chief Executive Officer (“CEO”) and the Executive Director (“ED”). Both the CEO and the ED are graduated from famous universities and from wealthy families. They involved in the daily operations of the listed company and all sales and purchase transactions above HK$100,000 have to be approved by both of them.

They have weekly meetings with the respective department heads discussing each department’s financial and operational affairs. Each department is assigned with financial budget which is achievable, and meeting financial budget is not the only criterion in assessing employees’ performance.

The company’s board of directors emphasizes ethical behavior seriously, and serious breach in those ethical guidelines will not be tolerated. The company has maintained a stable performance during the past seven years with moderate increment of profit and a relatively high dividend pay-out ratio.

The company has engaged a consulting firm to redesign its internal control system at the beginning of the year, and the system has just been implemented. The CEO and the ED expect the new system will further strengthen the company’s information flow.

Required:

1. Discuss the THREE characteristics of fraud.

2. Assume you are the audit engagement senior manager and you are now assessing the risk of fraud for this listed company. Based on information provided, discuss and explain your risk assessment of fraud due to the management and the employees.

Please read case and answer questions thank you.

Etsy is more than a marketplace: it’s a community of artists, creators, collectors, thinkers and doers. This e-commerce Web site focuses on handmade or vintage items as well as art and craft supplies, including art, photography, clothing, jewelry, edibles, bath & beauty products, quilts, knick-knacks, and toys. The site follows in the tradition of open craft fairs, giving sellers personal storefronts where they list their goods for a fee of $0.20 plus a sales commission of 3.5% for each item. Etsy has been described as “a crafty cross betweenAmazon and eBay,” “your grandma’s basement,” and as “one of the largest, most chaotic flea markets the world has ever known.”Etsy says its mission is to empower people to change the way the global economy works, to bring heart to commerce, and make the world more fair, more sustainable, and more fun.Etsy is headquartered in Brooklyn, New York, and also has offices in Hudson, New York, San Francisco, California, as well as international offices in Berlin, Dublin, London, Melbourne, Paris, and Toronto. The Hudson, New York location is an old cannonball factory housing Etsy’s call center and Web site design facilities.Etsy’s head office in Brooklyn houses the company’s technology, customer support, public relations, business, and communications teams as well as “Etsy Labs,” where employees can experiment with handmade projects themselves. It also features a Monday craft night where Etsy Labs is open to the public.In 2016, Etsy has over 800 employees and 24 million active buyers. About 1.6 million active shops sell on Etsy, and in 2015, these sellers moved $2.39 billion worth of merchandise. Etsy offers multiple options for paying for items, including credit card, money order, and PayPal.Very few of these sellers make a living solely through Etsy, but according to Etsy’s 2014 Seller Survey, 76% of sellers in the US consider their Etsy store to be a business, and a third of respondents said they were focusing on their Etsy store as their primary job.Etsy requires that all new products listed on the site be made by the people selling them—the use of mass production is prohibited. Etsy has made it possible for a lot of small businesses to get off the ground. According to Etsy, about 30% of Etsy entrepreneurs sell creative goods as their sole occupation, while around 45% use their earnings to cover household expense.Meanwhile, the site has been adding features at a furious pace. For instance, Etsy now provides social networking functions similar to those of Facebook that allow users to make friends with other Etsy members and keep track of their friends’ favorite shops and purchases. There’s also a gift service, which looks at the Facebook profiles of your friends and suggests items they might like, and something called Taste Test, which asks you to rate a smattering of random items and then suggests things to buy. You are invited, of course, to share the recommendations with your friends on Facebook and Twitter and with other Etsy members.Etsy’s founder and former CEO Rob Kalin hopes that these moves will make it easier for buyers to discover new products, but he also sees the new emphasis on social networking as part of a deepening of Etsy’s mission that goes beyond buying and selling. Etsy is also committed to its core values of craftsmanship, transparency, and responsibility. In 2016, Etsy became the first U.S. company to change its standing to a Certified B Corporation after going public in 2015. B Corporation certification requires the company to maintain a high level of social and environmental sustainability as well as transparency to the public with every aspect of their business.

1.What is Etsy’s business model and revenue model?

2.How important is “community” at Etsy? Visit Etsy’s website and describe its community-building features.

3.Visit the Help page on Etsy’s website and do a search on SEO to learn about search engine optimization. What tips does Etsy offer to sellers about this topic?

The Crafty Ltd is an online retailer of a broad range of art and craft products. You are an audit senior at the firm Star Wars & Co and are planning the financial report audit for the year ended 30 June 2020. The Crafty is a new client to your firm and this is the first year end since you were appointed. The following information was obtained from a meeting with the CEO, Katrina Maglanque.

The company has managed to ride a wave of renewed interest by younger people in arts and crafts and the revenue for 2020 is approximately $3.2 million. This continues a trend that has seen revenue increase by between 20% and 30% consistently for the six years since the company was started by Katrina and her tennis partner Jade Garrard who is the COO. Profits in 2020 are $0.2 million and have not increased significantly in four years despite the increased turnover. In 2016 there are plans to broaden the range of products sold to include bedding, curtains and household furnishings.

Rapid expansion has put pressure on the company’s various systems, not least of which is the online sales order system. The Crafty do not have their own in-house IT function relying on Katrina’s sister Kristine who is responsible for accounting, IT, HR, payroll and general office management.

You are aware that in previous years errors had been detected at the audit stage, partly due to IT system errors and partly due to Kristine’s inexperience as an accountant. Katrina and Kristine are confident that any errors in the financial report will be immaterial and not worth investigating given how busy they are with the growing business.

As part of the growth of the business the company is looking to raise additional bank borrowings to fund more warehouse space and invest in improvements to the IT systems. Katrina has indicated that she needs the audit report signed before 15 September which is when she will be meeting the bank to discuss the details of the loan. Based on the above information, identify and explain five (5) issues that give rise to risks for the financial report external audit you are about to commence.

Based on the above information, identify and explain five (5) issues that give rise to risks for the financial report external audit you are about to commence.    

Auto Parts, Inc. is medium-sized company that manufactures auto parts in Buffalo, New York. The company currently loses $30,000 per month. The owner of the company is evaluating whether she should shut down the factory. She thinks that the factory should continue to operate until the economic environment improves and buyer for the factory can be identified. The logic of the owner is that her company has already invested millions of dollars in the factory over the years. The monthly fixed costs for the factory are $40,000. The CEO of Auto Parts, Inc. thinks the factory should be shut down because most the monthly fixed costs ($40,000/month) are sunk costs. Do you agree with the owner or the CEO? Explain the logic of your argument, including a numerical demonstration.

Can someone please explain who is correct and also provide a numerical demonstration showing this?

Sheffield Inc. was authorized to issue 100000 £10 par value ordinary shares. As of December 31, 2020, the company had issued 54000 shares at an average price of £22 per share. During 2020, the company felt that the shares were undervalued so it purchased 9800 treasury shares at £16 per share. When the share price rebounded later in the year, the company sold 4200 of the treasury shares for £24 per share. Retained earnings was £1666000 at December 31, 2020.

Total equity at December 31, 2020 is

£2697200.

£2994000.

£2764400.

£2798000.

The Government has recently launched a new and innovative transport system in the country, which is managed by the Metro Express Co Ltd. The CEO of the company is aware that a big challenge lies ahead in managing a new company and to run it efficiently. The Chairperson of the Board of Directors has stated, at the first meeting, that “Managing an organisation requires various skills and the ability to organise various resources. All these tasks must be executed with an understanding of how actions influence the organisation, both internally and externally.” Furthermore, the Board of Directors of the Metro Express Co Ltd has stressed that one of the significant influences on how an organisation is managed is the system of corporate governance.

You are requested to advise the CEO on:

(i) all the factors he must consider, including accounting information, to manage the decision making process of the company.

INTRODUCTION

BODY

CONCLUSION

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data:

Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 1% level of significance. Will you use a left tailed, right tailed, or two tailed test?

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data:

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Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Assume that the distribution of differences is approximately normal, mound-shaped and symmetric. Use a 5% level of significance. What is the alternate hypothesis?

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What are the pros and cons for two acquired company to continue to operate independently?

Imagine that you work at a local department store in a midlevel management position. You learn that your company is being acquired by Big Box, a much larger, non-union retailer. The sale and purchase of your store is intended to bring more product, logistical efficiency, and employee efficiencies to your particular market. Describe three significant HR issues that you and your people will likely face after your company is acquired.