This project aims to provide you with an opportunity to assess the business risks and perform analytical procedures for a real-world company. The project focuses on the following categories of information related to understanding the entity and its environment:

for Walmart 2021 -2022

• Nature of the entity
• Industry, Regulatory, and External Factors
• Objectives Strategies, and Business Risks
• Entity Performance Measures and Monitoring
• Management
• Governance

Part 1 Assessing Business Risks

Attached is a questionnaire (WORD template below) that is to be used for assessing and documenting your assigned companys business risks. In completing the questionnaire, you need to attempt to answer each question and then determine the possible effect(s) on the audit. Consider what each item might mean from a risk based approach to audit planning and procedures that might need to be considered in the audit.

Information needed to identify the business risks can be obtained from the companys annual report, FORM 10K, and proxy materials. Typically, these documents can be obtained from the companys website. The companys website also contains information on the audit committee (e.g., charter), internal audit function, and corporate ethics (e.g., conflict of interest policies). You should also consider obtaining a financial analysts report on the assigned company. If you cannot find a free analysts report, do not pay for one.

There may be some questions that you will not be able to answer. If you cannot answer a question, respond information not available.

Part 2 Performing Analytical Procedures

You are also required to perform analytical procedures (ratio analysis) on the selected company for 3 years and compare those ratios across time, and to industry data or a major competitor. For example, if you choose Lockheed Martin you can compare Lockheed Martin to industry data or to a competitor of similar size.

Business Risk Factors	Response	Possible Effect(s) on the Audit
Client Name: Entity and Environment Category: Nature of the Entity Year ended:	Completed by:
Reviewed by:
What are the entitys major sources of revenue and what is the nature of its products and/or services?
Who are the entitys key customers?
Who are the entitys key suppliers?
What is the nature of the entitys organizational structure?
Where are its major locations?
What are the entitys major assets?
What are the entitys major liabilities?
What are the entitys sources of financing, and current and prospective financial condition? (Note that your ratio analysis may help answer this question.)
Are there any potential related parties?
Were there any significant events and transactions (e.g., acquisitions or disposals of subsidiaries, businesses, or product lines) during the year?
Does the entity have any major uncertainties or contingencies (e.g., lawsuits)?

Client Name: Entity and Environment Category: Industry, Regulatory, and External Factors Year ended:	Completed by:
Reviewed by:
Business Risk Factor	Response	Possible Effect(s) on the Audit
What is the level of competition in the industry and does this level of competitiveness present any risks for the entity?
Do technological factors present any risks for the entity?
Do general economic conditions present any risks for the entity?
Does the regulatory environment present any risks for the entity?
Does the legal/political environment present any risks for the entity?
Do accounting principles, including those that are industry-specific or determined by a regulatory authority, present any risks for the entity?
Do social/environmental factors present any risks for the entity?
Are there any other external factors that present a risk for the entity?

Client Name: Entity and Environment Category: Objectives, Strategies, and Business Risks Year ended:	Completed by:
Reviewed by:
Business Risk Factor	Response	Possible Effect(s) on the Audit
Does the entity set entity-wide objectives and are they supported by strategic plans?
Does the entity have clear objectives in terms of budget, profit, and other financial and operating goals?
Does the entity have an entity risk assessment process that includes estimating the significance of the risks, assessing the likelihood of their occurring, and determining the actions needed to respond to the risks?

Client Name: Entity and Environment Category: Entity Performance Measures and Monitoring Year ended:	Completed by:
Reviewed by:
Business Risk Factor	Response	Possible Effect(s) on the Audit
What key performance indicators does the entity use to measure performance?
Does the entity benchmark its performance against its industry and major competitors?
Does the entity consider financial analysts research and earnings reports?
Are there communication channels within the entity for individuals to report suspected improprieties?
Does the entity have an internal audit function?
Does the internal audit function have a charter?
Who does the chief audit executive report to?

Business Risk Factor	Response	Possible Effect(s) on the Audit
Client Name: Entity and Environment Category: Management Year ended:	Completed by:
Reviewed by:
Do one or a few individuals dominate management and operating decisions?
Does management demonstrate the appropriate tone at the top, including explicit moral guidance about what is right or wrong? More specifically, has a code of conduct been established that includes appropriate entity policies regarding acceptable business practices and conflicts of interest? Are these policies adequately communicated to employees?
Does management adequately monitored business risks?
Does management encourage that everyday dealings with customers, suppliers, employees, and other parties be based on honesty and fairness?
Has management established and maintained effective internal control over financial reporting?
Is there a motivation for management to engage in fraudulent financial reporting? (Refer to Tables 4-4 to 4-6 in the textbook for a list of specific indicators that might indicate fraudulent reporting.)
Has management adopted sound accounting principles?
Does management adequately consult with its auditor on accounting issues?
Is management willing to adjust the financial statements for misstatements that approach a material amount?
Is there high turnover of senior management, legal counsel, or board members?
Is there a known history of securities law violations or claims against the entity or its senior management alleging fraud or violations of securities laws?

Client Name: Entity and Environment Category: Governance Year ended:	Completed by:
Reviewed by:
Business Risk Factor	Response	Possible Effect(s) on the Audit
Does the board of directors and its major committees (e.g., audit committee) contain an appropriate number of independent directors?
Are there regular meetings of the board of directors to set policies and objectives, review the entitys performance, and take appropriate action?
Does the board of directors ensure that entitys objectives are congruent with the major stakeholders (e.g., investors and creditors)?
Does the audit committee have a charter?
Does the audit committee have adequate resources and authority to discharge its responsibilities?
How often does the audit committee meet annually?
Does the audit committee meet individually with the external auditor and internal audit executive without management present?