You are a graduate working for W&S Partners, a Canadian accounting firm with offices located in each of Canada's major cities. W&S Partners has just been awarded the December 31, 2012, statutory audit for Cloud 9 Ltd. The audit team assigned to this client is:
• Jo Wadley, partner
• Sharon Gallagher, audit manager
• Josh Thomas and Suzie Pickering, audit seniors
• Mark Batten, IT audit manager
• Ian Harper and you, graduates.
As a part of the planning process for the new audit, the audit team needs to gain an understanding of Cloud 9's structure and its business environment. By understanding the client's business, the audit team can identify potential risks that may have a significant effect on the financial statements. This will assist the team in planning and performing the audit.
Required
Answer the following questions based on the additional information about Cloud 9 presented in the appendix to this book and in this and earlier chapters. You should also consider your answer to the case study questions in earlier chapters where relevant.
Your task is to research the retail and wholesale footwear industries and report back to the audit team. Your report will form part of the overall understanding of Cloud 9's structure and its environment. You should concentrate your research on providing findings from those areas that have a financial reporting impact and are considered probable given Cloud 9's operations. In conducting your research, you should consider the following key market forces as they relate to Cloud 9's operations.