Knapp Nextcard Case

Case 5.8 NextCard, Inc. 1.Should meeters evaluate the soundness of a clients commerce plume? Defend your answer. Auditors should not evaluate the soundness of a clients livestock model. They are not required to have knowledge and expertise to start and contain a successful line of merchandise. A business model is usually evaluated by a bank or other financial institution that the follow acquires capital from. An hearer is required to uphold integrity and has a responsibility to the stockholders to handle competence and independence. All of this must be achieved while examining sufficient, disposed(p) enjoin to obtain reasonable assurance as to the cloth paleness of the clients financial statements. This evidence supports what has happened thus far in the clients business. A business model is a prediction of what is pass opinion for the business by optimistic, biased circumspection, not what has happened in the past. An inspectors target does not include predicting the start-up future of a business, nor to rule fare out of the closet bilgewater. 2.Identify and briefly describe the specific fraud take chances factors present during the 2000 NextCard audit. How should these factors have affected the planning and instruction execution of that engagement?

There were many risk factors present during the 2000 NextCard audit: unusually rapid growth and profitability, significant related-party transactions, poor or change state financial terminal figure when management guarantees debt, and management uses aggressive story measures to boost stock price. NextC ard, integrated respectively demonstrated t! hese risks as: extending $1 billion of attribute to its customers with an average balance of $2000, executives sold-off bountiful portions of their ownership interests in the company before the financial condition became apparent, in 1999 the company produced a passage of $77.2 billion followed by a $81.9 billion loss in 2000 and NextCards executive chose to screen the companys financial problems, and the management materially...If you motive to get a broad essay, order it on our website: OrderCustomPaper.com

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