The point that seemed to truly name my attending as being a job is some of the profitableness ratios. Get downing with the Gross Profit border. it seems at the minute that Just Feet makes $ 41. 62 in 1999 and in 1998 $ 41. 53 in net income. but it cost the company more to bring forth than what they are doing in net income. This shows that they need to take down their costs in doing their merchandise to be more profitable. The company has non even reached a breakeven point. We besides see that in the two old ages of 1998 to 1999 that there was a lessening in profitableness a lessening in return of equity. This means that the company is doing less net income for each dollar that the stockholders have invested in the company. This ratio shows us how expeditiously the company is working. and it shows how expeditiously direction is utilizing the financess that stockholders have contributed to the company. So in making these analysis for Just for Feet Inc. I would be oppugning the efficiency of direction for managing the income that stockholders have contributed. I would besides desire to look for closely at how the company is bring forthing. the cost they are holding is higher than the net income. for that ground we would desire to measure how they could take down cost to do the net income more profitable for the company. Question 2.

Merely for Feet operated big. high-volume retail shops. Identify internal control hazards common to such a concern. How should these hazards affect the audit planning determinations for such a client? One of the hazards that a big retail shop like Just for Feet Inc. could happen in internal controls is in the country of Inventory Control. The largest concern is that what is stated on the Financial statements truly exist. It is of import to measure this hazard so that a company can see if there is any larceny by employees and to do certain that on its balance sheet it shows an accurate study of stock list. Another country of hazard in a high volume retail shop would be the issue of managing hard currency.

Since there is such a high turnover of hard currency in a big retail shop. there needs to be good internal controls in topographic point that will forestall false histories receivable. and a deceit of grosss. Another hazard that needs to be evaluated is the direction operations and how they handle and divide duties within the location. In retail shops there can be a high turnover of people. for that ground direction needs to do certain that there are ever the proper division of responsibilities. they need to do certain all paperwork is decently recorded and accounted for. As to how it will impact the audit program. the hearer needs to do certain that there is proper division of responsibilities. demands to prove to do certain values are right and there are no misstatements. The demand to look closely at the stock list. accounting for the proper value on manus every bit good as the proper points in stock. Question 3

Merely for pess operated in an highly competitory industry. or sub-industry. Identify built-in hazard factors common to concerns confronting such competitory conditions. How should these hazards affect the audit planning determinations for such a client? An built-in hazard is when a company is susceptible to a misstatement in fiscal statements. It is the duty of an hearer to transport out audits that will do these hazards low to nonexistent. An illustration of this is segregation of responsibility. IN a extremely competitory concern net income and larger gross will place you as being the best. a possible hazard is the deficiency of forces that keeps disbursals low giving people dual responsibilities. but making an built-in hazard. If we do non hold direction subscribing off on purchase orders. and others account for the merchandise being received and another accounting for it being sold and another corroborating the completion of the procedure in the accounting of such points through monthly shuttings or such. An hearer would desire to measure that direction has the experience necessary to transport out these programs. And those that are in the mentioned places besides would be experienced. If there is a high turnover in these places it could be a mark of deceitful behaviour because people who are trust worthy would non remain in a topographic point to make something dishonest. All these type of alterations should be evaluated by the hearer. Question 4

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Fix a comprehensive list. in a slug format of the audit hazard factors present for the 1998 Just for Feet audit. Identify the five audit hazard factors that you believe were most critical to the successful completion of that audit. Rank these hazard factors from least to most of import and be prepared to support your rankings. Briefly explain whether or non you believe that the Deloitte hearers responded suitably to the five critical audit hazard factors that you identified.

The accent that direction made on making the net incomes ends at whatever cost. The close twelvemonth terminal minutess that Just for Feet was engaged in The jurisprudence hard currency resources of the company
The type of concern scheme that the direction of Just for Feet used The manner that the company ever kept the stock monetary values on the high terminal The addition in stock list at the terminal of both old ages.

The seller verifications non coming through to corroborate dealing by Just for Feet.

The hazard factors that were most important to the audits completion would be the Inherent Risk. control hazard. audit hazard and sensing hazard. An Audited account hazard is when an hearer answers the undermentioned inquiries: Is there a hazard of fraud? Is this hazard related to the complexness of minutess? Does it include and important dealing out of the normal class of concern? Karl M Johnston. ( Auditing 2014 ) states that “whether the hazard is related to recent important economic accounting. or other developments and. it requires specific attending. ” In my ranking of more of import to least of import in hazard factors I think that they are by and large all every bit of import. Built-in hazard are of import because it will measure if there has been some type of larceny. or if there was anything changed in the signifier of a non-routine minutess or a complex dealing.

Kind of like what Just for Feet did when raised the stock list at the terminal of two old ages. The Control hazard is besides of equal importance because it is relates to a misstatement being stopped with internal controls in topographic point. The fact that Just for Feet was leting misstatements to be written by outside sellers to direct to the hearer shows that the deficiency of internal controls within the Just for Feet entity allowed this type of hapless deceitful direction to happen. This would be assessed through averment degree cheques like: Evaluation. being. presentation. completeness and rights and duties revelations. In my sentiment Deloitte did non react suitably to these hazard factors. Though they may hold seen the hazard factors. though they saw the misstatements and questioned them. they did non move consequently. If they had the SEC would non hold fined them. Question 5

Put yourself in the place of Thomas Shine in this instance. How would you hold responded when Don-Allen Ruttenberg asked you to direct a false verification to Deloitte & A ; Touche? Before reacting. place the parties who will be affected by your determination?

The people who would hold been affected by my determination is the stockholders. others who worked for the company. the populace. direction and executives of the company. even those who were clients of Just for Feet. But even so with all those people at hazard I would hold said no and risked losing my occupation by being fired. My ethical place to adhere to what is right is what would necessitate me to do this determination. To be asked to make something fraudulent would do me desire to divide myself from this type of direction. At the terminal I would pay the monetary value for my bad pick.

Mentions
hypertext transfer protocol: //www. investinganswers. com/financial-dictionary/financial-statement-analysis/return-equity-roe-916 retrieved 10/2/14

hypertext transfer protocol: //www. silent persons. com/how-to/content/how-to-assess-inventory-management-control-risk. hypertext markup language retrieved 10/3/14

hypertext transfer protocol: //accounting-simplified. com/audit/introduction/audit-assertions. hypertext markup language retrieved 10/5/14

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