Here's my audit risk analysis project. And my selected public company is Alibaba Group. In case you don't know this company, I list a website that you can get to know it.

Please read and follow the assignment instructions to finish this question! Thanks.

If the answer is good enough, I will add some tips =)

Alibaba Group:

http://projects.wsj.com/alibaba/

http://www.alibabagroup.com/en/global/home

https://en.wikipedia.org/wiki/Alibaba_Group

A) Assignment Instructions 1. Complete an audit risk analysis on a public company. This is an individual assignment. No two students will be allowed to choose the same company. Each student will assume the role of an audit manager of a public accounting firm who has been asked by the audit partner to assess the acceptability of the given company as an audit client and to write a letter summarizing this assessment. At a minimum, your letter should cover the following points. 2. The letter should present a brief company profile that comments on, among other items, the history of the firm, its major products, its principal officers, recent developments, concerning the firm (such as a merger, planned merger, or new products or technological advancements), etc. 3. Of particular interest to the partner will be what some audit firms refer to as \"key items.\" These are potential \"hot spots\" that may demand special attention during the course of the audit. Examples: existence of a management compensation plan (bonus scheme) tied to reported profits, a significant number of related parties and related party transactions; new, high-risk projects/products; important technological advancements or changes in the company's industry; a significant increase in bad debts over the past year, industry that requires specialized skills to audit, etc. 4. Somewhere within the letter you will need to discuss the apparent financial condition of the firm and highlight key financial ratios, such as, the current ratio, return on assets, Acct 6348 - Advanced Audit Research - Audit Risk Analysis Project Page 1 of 3 inventory turnover, etc. In particular, you should bring to the partner's attention the ratios and tends that may be indicative of the future prospects of the firm (good or bad). For instance, if the return on sales percentage has plummeted in recent years, that fact should probably be brought to the attention of the partner (and of course, you should provide some explanation as to why this sharp downturn has occurred). Both cross-sectional and longitudinal analyses will be appropriate. Additionally, tubular summaries and exhibits (graphs, pie charts, time-series charts, etc.) will be useful means to present quantitative data regarding the firm. Make sure to look at ratios over time and compared with industry averages and competitors. 5. You should also look at the company's internal controls. Do they have an effective ethical training program and Code of Conduct? Do they have an audit committee, risk management department, or internal control department? Do they use COSO framework? What were the results of their previous IC audits? 6. Finally, you should conclude your letter with a recommendation for the partner. For example, the recommendation may be that the firm appears to be an acceptable client although it does pose a fairly high level of audit risk and business risk, or the recommendation may be that more information is needed before an acceptance/rejection decision is made. (If the latter conclusion is reached, you should identify the additional information you believe needs to be obtained before an acceptance/rejection decision can be made.) 7. Feel free to use all references sources available online or in the library. These could include: MSN Money, Yahoo finance, First Call, library databases such as Hoover's, etc. Also you can utilize your company's annual report, 10K and other SEC filings. Acct 6348 - Advanced Audit Research - Audit Risk Analysis Project Page 2 of 3 8. AS 2110 (AS 12), Identifying and Assessing Risks of Material Misstatement and any other appropriate regulations should be used as a guideline in completing this analysis Do not neglect references to regulation such as SASs 103-111, SAS 99, AS 2101 (AS 5), AS 2110 (AS 12), AS 1105 (15-including AU 316) and any other AICPA or PCAOB guidance on risk assessment. This is important advice. Some web sites that can assist you with your analytical review are: http://financials.morningstar.com - choose your company name under \"quote\" and then choose \"Key ratios\" http://www.dailyfinance.com - enter your company name under \"get quote\" and then select \"financial ratios\" 9. The written report can be any length (at least 5 pages) that the student deems necessary to convey the information that was collected. It should be typed and double spaced. Any references used should be properly documented. Acct 6348 - Advanced Audit Research - Audit Risk Analysis Project Page 3 of 3