Respond to each question below:

  1. What ethical and legal liability relating to accountants and auditors might relate to your SEC 10-K company?
  2. What trends in sales, cost of goods sold, and gross profit do you see? Create a small table for your records and refer to percentages in terms of year to year change for dollar values and the gross profit percentage.
  3. Review net income and post comments using the techniques you used for gross profit.
  4. International Issues:  comment on foreign currency issues and the global picture for your SEC 10-K company.


Read the Notes to the Financial Statements (FS) for your SEC 10-K company.  These “notes” are displayed after the financial statements.

  1. Inventory comments: comment on inventory issues using the concepts of materiality and geographic location.
  2. Inventory and Sales: comment on issues related to diversity in customer base and issues of internal control.
  3. Accounts Receivable and Sales:  comment on issues related to the selling and distribution system of your SEC 10-K company and issues of fraud as well as internal control.
  4. Challenges and opportunities you see as you relate our current textbook topics to your company.  Details are high level in the SEC 10-K but organizations rely on Auditing concepts, as they prepare for the audits and as part of their internal control process.


The financial statements for your company are usually posted in Item 8 of the SEC 10-K document. The management discussion and analysis section is earlier in the report.

  1. The management of risk and uncertainty is often included in the MD&A section comments. What do you learn of interest here?
  2. Divisions and Product Lines may be discussed in the MD&A section.  What audit and internal control issues may arise?
  3. Management often explains higher or lower than expected in their comments. Discuss the profitability and other comments in the MD&A section as they relate to our chapters thus on audit strategy, risk, internal control, materiality, and management.



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