Accounting Management Capstone Audit Plan TASK 2 PDF

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Summary

Accounting Management Capstone Audit Plan for Gap Inc. Task 2.
Broad audit Plan for Gap Inc. Identify control risks and areas of focus for the audit....

Description

GAP INC. Audit Plan

Shanelle Gibson

ACC495

Gap Inc. Audit Plan •

1

Complete the “Company Information Template” for your chosen company based on

the 2020 10-K and the 2020 annual report. 1.

Company Information: Identify the company’s basic information Company name:

The Gap, Inc. Company’s date of formation: The company was incorporated the State of California in July 1969 and was reincorporated in the State of Delaware in May 1988. Industry in which the company operates: Gap Inc. is a leading global apparel retail company. We offer apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix, Janie and Jack, and Hill City brands Company’s size in terms of annual sales: The Gap, Inc. annual sales for the fiscal year 2021 was $13,800,000 Company’s size in terms of total assets: The Gap Inc. total assets for fiscal year 2021 was $13,769,000 Company’s size in terms of employees (all full- and part-time): As of January 30, 2021, we had a workforce of approximately 117,000 employees. We also hire seasonal employees, primarily during the peak holiday selling season. Company’s size in terms of total market value: 374,000,000 x Location of company headquarters, including the states and countries in which it operates:

Gap Inc. Audit Plan

2

The company headquarters is located on Two Folsom Street, San Francisco, California 94105. Gap Inc. had 3,100 company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico as of January 30 2021. They also have franchise agreements with unaffiliated franchisees to operate Old Navy, Gap, and Banana Republic stores throughout Asia, Europe, Latin America, the Middle East, and Africa.

2.

Customers and suppliers: Identify the company’s top three customers and suppliers.

Gap is designed to build the foundation of modern wardrobes through every stage of life with apparel and accessories for adult men and women under the Gap name, in addition to Gap Kids, baby Gap, Gap Maternity, Gap Body, and Gap Fit collections. In fiscal 2020, the brand launched Gap Teen. Beginning in 1987 with the opening of the first store outside North America in London, Gap continues to connect with customers around the world through specialty stores, online, and franchise stores. In addition, we bring the brand to value-conscious customers, with exclusively designed collections for Gap Outlet and Gap Factory stores and online. There isn’t any listed suppliers. However, we purchase private label and non-private label merchandise from over 800 vendors. Our vendors have factories in about 30 countries.

3.

Financing: Identify the company’s sources of financing.

The main sources of financing for Gap Inc.

4.

Related Parties: Identify the company’s related parties, including people and other

companies.

Gap Inc. Audit Plan

5.

Company Life Cycle: Identify the current stage in the company’s life cycle. The company is in the growth stage. They have already passed the introductory stage

since the company has been around since 1969. There is still growth for the company to reach the maturity phase.

6.

Risks: Identify three risks associated with this business and/or industry.

7.

Economic Factors: Identify two key economic factors that affect the company and how it

stands with respect to these factors.

8.

Accounting: Describe one unique accounting consideration for companies in this

industry.

9.

Relevant matters: Discuss any legal, regulatory, and social matters the company is faced

with.

10.

Additional questions: Recommend two additional questions you would ask a company

representative in an interview setting. Justify your question recommendations and identify the individuals within the company to whom you would ask each question.

3

Gap Inc. Audit Plan •

Analyze the data compiled in Part A and, based upon your analysis, discuss the

three primary audit concerns. For example, this may include inventory valuation and existence, receivable collections, overstatement of revenues (fictitious sales, premature revenue recognition, manipulation of adjustments to revenues), accounts payable and purchases fraud, concerns with pension plans, etc.

•

Perform preliminary analytical procedures.

1.

This includes vertical analysis, ratio analysis, trend analysis, etc.

2.

Determine if the company is growing or declining based on the results.

3.

Identify any fluctuations in accounts. Justify the fluctuations.

4.

Provide the company’s stock price.

5.

Identify the financial strengths of the company.

6.

Compare the company to other companies in the industry.

•

Prepare a broad-based audit plan based upon your findings.

1.

Determine the impact of the prior year’s audit opinion for the current year’s audit plan.

2.

Recommend whether the control risk of your chosen company should be assessed at the

maximum level or below. Justify your recommendation. 3.

Discuss the control risk assessment identified in #2 and what impact it will have on the

audit procedures to be performed. Include in your discussion each of the following: • nature

4

Gap Inc. Audit Plan • timing • extent 4.

Identify areas of focus for the upcoming audit, including specific balance sheet and

income statement accounts based upon the significance of those accounts and their related risks. 5.

Recommend which accounts identified in part #4 should be tested using analytical

procedures and which accounts should be tested through substantive tests of detail. Justify your recommendation made. 6.

Discuss whether or not there is a going-concern consideration.

7.

Recommend whether the audit should be conducted at one main location or if the audit

team should be dispersed to other locations. a. Justify your recommendation made. 8.

Describe the five main steps the audit team will perform.

5...