Case 5.8 NextCard, Inc. 1.Should meeters evaluate the soundness of a clients commerce circuit? Defend your answer. Auditors should not evaluate the soundness of a clients line of honorable mention model. They are not required to have knowledge and expertise to start and contain a successful product line. A business model is usually evaluated by a bank or other financial institution that the go with acquires capital from. An attendee is required to uphold integrity and has a responsibility to the stockholders to contain competence and independence. All of this must be achieved while examining sufficient, disposed(p) leaven to obtain reasonable assurance as to the cloth equity of the clients financial statements. This evidence supports what has happened thus far in the clients business. A business model is a prediction of what is pass astuteness for the business by optimistic, biased direction, not what has happened in the past. An analyzeors invention d oes not include predicting the start-up future of a business, nor to rule cause out of the closet prank. 2.Identify and briefly describe the specific fraud take chances factors present during the 2000 NextCard audit. How should these factors have affected the planning and death penalty of that engagement?
There were many risk factors present during the 2000 NextCard audit: unusually rapid growth and profitability, significant related-party transactions, poor or change state financial terminal figure when management guarantees debt, and management uses aggressive story measures to boost stock price. N extCard, interconnected respectively demons! trated these risks as: extending $1 billion of credit to its customers with an average balance of $2000, executives sold-off bountiful portions of their ownership interests in the company before the financial condition became apparent, in 1999 the company produced a injustice of $77.2 billion followed by a $81.9 billion loss in 2000 and NextCards executive chose to screen the companys financial problems, and the management materially...If you neediness to get a broad essay, order it on our website: OrderCustomPaper.com
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