Boudreaux Thibodeaux has been involved with the IIA on several international committees and is a CIA, CISA, CRMA, and CFE. He is the Chief Audit Executive (CAE) of PDQ, a globally-recognized, publicly traded manufacturer of high-end bicycles headquartered in New Orleans. Boudreaux has worked for three Fortune 1000 companies in various executive roles, and he is well-respected and known for his ability to apply his business acumen to internal audit and for his keen analytical mind. He is valued by Bill Stell, Chairman of the Audit Committee, for his candid and straight-forward communication. PDQ has just completed an acquisition of Kypo, which is a manufacturer of mid-market and youth-oriented bicycles, even though Kypo has twice the sales volume. The Board has requested that Boudreaux develop a plan for auditing Kypos operations, to provide an objective and independent assessment. The Chairman of the Board, Belinda Kidd, is concerned that the CEO, Tom Fox, was more concerned about consummating the deal than on the quality of revenue, transparency, and sustainability. She is confident that Boudreaux will be skeptical and will present a balanced, factual report and will not be swayed by the CEOs enthusiasm for the acquisition. The week before the initial strategizing for the Kypo plan was scheduled to begin, a series of events unfolds. The CFO of PDQs Brazilian operation has been terminated by the CEO and Boudreaux has been requested to assume the role of interim CFO for six months until a search can locate a suitable replacement. Amanda, the Audit Manager, has been requested by PDQs CEO to lead the internal audit group as CAE until Boudreaux returns. Boudreaux had recommended Brit Marzie, the Senior Director, as the interim but the CEO was adamant that new blood was needed. The Chairman of the Board and the Chairman of the Audit Committee have requested that the Kypo review be given top priority. 3 Amanda is viewed as a fast-tracker but only has three years of experience and this will be her first strategic assignment. The majority of her experience has been in inventory and supply chain management audits. During her previous three years, Amanda had Boudreaux as a mentor and resource to turn to for advice. Nonetheless, the CEO has informed Amanda that she needs to be groomed to one day replace Boudreaux. Amanda has confided with her boyfriend that this assignment will be a make or break project for her career. The CEO meets with the audit group to wish them well and to emphasize the importance of the acquisition to PDQs share value. He stated that the bondholders and investors will be closely watching to see if PDQ can realize synergies to achieve the deals objectives. He stated that unfortunately, the Board would be meeting next month and that he needed a report pretty quick. He wants a week to review the report before he presents it to the Audit Committee and then to the Board. Amanda has accumulated the information listed in the attachment to present to her fourperson audit team. Julius, Natalie, Stephanie, and Melissa are relatively new staff members but are excited about being assigned to this high-level project. During the threeday meeting and in-depth discussions, every issue seemed to be followed by the question: What would Boudreaux do?

What are some of the significant financial, operational, and information technology risks in PDQs operations? What controls should the audit team expect to find, to address the identified risks? What kinds of audit procedures should Amandas team perform on the identified controls?