gove a printed detailed list of audit risk and business risk
AutoSmart Corp AutoSmart is a public company founded in 2004 to manufacture and sell specialty auto products mainly relating to paint protection and rustproofing. By 2013, the AutoSmart board of directors felt that the company's products had fully matured and that it needed to diversify. AutoSmart aggressively sought out new products, and in March 2014 it acquired the formula and patent for a specialized motor lubricant (Smooth-Run) from SIM, LLC. In addition, the company purchased 15 percent of SIM's outstanding common stock. At the time of the stock purchase, Steve Matthews owned 100 percent of SIM; he retained ownership of 85 percent of percent purchase. In December 2014, the board of directors appointed Mr. Matthews to be president of AutoSmart. Smooth-Run is unlike conventional motor lubricants. Its innovative molecular structure accounts for what management believes is its superior performance. Although it is more expensive to produce and has a higher selling price than its conventional competitors, management believes that it will reduce maintenance costs and extend the life of equipment in which it is used. AutoSmart's main competitor is a very successful multinational conglomerate that has excellent customer recognition of its products and a large distribution network. To create a market niche for Smooth-Run, AutoSmart's management is targeting commercial businesses in western states that service vehicle fleets and industrial equipment. AutoSmart's existing facilities were not adequate to produce Smooth-Run in commercial quantities. In June 2015 AutoSmart commenced construction of a new plant in Nevada. After lengthy negotiation, it received a S900,000 grant from the state government. The terms of the grant require AutoSmart to maintain certain employment levels in Nevada over the next three years or the grant must be repaid. The new facilities became operational on December 1, 2015. AutoSmart financed its recent expansion with a term bank loan. Management is considering issuing additional stock later in 2016 to address the SIM after AutoSmart's 15 mpany's cash flow problems AutoSmart's auditors resigned in February 2016, after which
