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Running Head: RISK ANALYSIS MEMO 1
Running Head: RISK ANALYSIS MEMO 1
Running Head: RISK ANALYSIS MEMO 1
Names
Institution
Running head: RISK ANALYSIS MEMO 2
In this memo, I will fist introduce the overall strategy of the Match Group and then indicate one
most critical strategy risk and a business process to reduce it. Then, I will briefly describe the
objective of the business process based on the overall strategy and state one process risk that
threat to achieving this goal. Additionally, I will ascertain and appraise two internal controls that
report the process threat. At the end of the memo, I will ascertain one financial report account
and debate the risk misstatement constructed on five assertions and give the audit measures for
each assertion.
Match Group’s strategy is to make available a widespread consumer preference through offering
dating products that mutually appeal to the widest range of customers to take full advantage of
the ability to capture other users (Street & Park, 2017). The most fundamental objective of every
company is to increase its market share and thus make profits in return. In regard, Match.com is
not an exception as it requires long-term plans that will sustain the company given that many
competitors are providing similar dating services in the industry (Chepkwony, 2017.
Nonetheless, rapid changes of customers’ needs may lead to loss of opportunities in the market
hence reducing growth and profitability of the company. To ensure this strategic risk is
mitigated, Match.com should substantially invest in sales and marketing to facilitate effective
sales and marketing of the dating services. Therefore, Match.com should spend more time on
Running head: RISK ANALYSIS MEMO 3
appealing to many more customers to buy dating services through advertisement channels such
as mobile and online video platforms (Saracco & Ruzalski, 2017). However, Match.com has
devolved more funds so as to make sure that both offline and online dating users are maintained.
Additionally, sales and marketing facilitate the achievement of this overall objective of
Match.com by offering an innovation of the dating services that will help in determining
customers’ preference hence providing advice to the company to put more resource in the
Match.com deals mutually with online and offline dating facilities through virtual networks.
These channels are still undergoing development hence they have not yet been approved thus it
gives no assurance that the channel that is used to providing these services (Peecher, 2017).
Internal controls at Match that address this process risk and whether they have been effectively
designed
Access controls: Match.com should ensure that proper admission to dissimilar parts of the
system is monitored via passwords, lockouts, and electronic access logs in order to keep
unapproved users out of the systems while creating a way to audit the procedure of the method to
ascertain the sources of the divergences (Bentley-Goode, Newton & Thompson, 2017).
However, according to me, access control have been designed effectively since it does not permit
any authorize person to access the system without the awareness of the Match.com.
Approval controls: Match.com should also ensure that specific managers permit confident
available that transactions have been evaluated and accepted by the appropriate experts (Vrijens
& Urquhart, 2014). This will prevent many dishonest people from creating large fake
To ascertained true and fair view of the financial statement, it is necessary to check and confirm
the effectiveness of the internal control system on how it function thus establishing the best way
to test for the errors and frauds. An auditor will have to select some of the accounts randomly in
the financial statement and used them to measure whether internal control is strong or weak since
Account payable: It shows the responsibilities to creditors for purchases of the stock and
materials on credit. Procurements that relates to the accounts payable may be stated at the gross
method. To adequately test for account payable, assertions on the acquisitions and cost of goods
Completeness: An internal auditor should make should that carry out an understanding on the
account payable ledger with control account, Purchases deadlines tests to determine whether if
properties for which title has passed or not passed are properly accounted for. Make a
reconciliation of the accounts payable ledger with the main account summarizing the ledger.
Furthermore, ensure that cash disbursement is match to any reductions in accounts payables and
subsequently check the whether suppliers were paid the similar amount as stated. It is also vital
to check the amount which cannot be matched in an account is deemed not to have occurred. In
addition, main suppliers of the company should be contacted. Match.com monthly reports should
match up with what it stated by the company as well as catering for more detail on situations
whether there are discrepancies. A more detailed, thorough analysis might help in detecting
missing information. Check that Match.com values for the accounts payable is up to the
standards accounting procedures. Furthermore, the company should present the account payable
balance according to the standards layout. Account payable should be presented as an account
liability in the financial position of Match.com, and any up normal transactions should be
Running head: RISK ANALYSIS MEMO 5
disclosed. Considering the trend analysis: sales (14.1%), Net income (7.7%), net income
increases in respect with an increase in sales whereas total liabilities (24%), and account payable
(3.5%), this depicts that depicts that account payables are understated meaning there is high risks
of RMM.
Existence/Occurrence: This entails checking of the recorded account payable whether it is valid
liability or not at the statement of the position date. Furthermore, Match.com should make a
confirmations that are used even if it is small and zero balances should sampled all just like large
balances. In cases where orders are placed with the supplier on consistent basis, confirmation
must be acknowledge to the supplier in regard to the balance due at the financial year end.
circumstances that the data in the balance sheets is found to have material misstatement on the
assertions that have been selected, it is deemed that RMM is high. After checking considerably
using substantive tests and procedure, ignore the three assumptions that were involved in the
ascertainment. In this case however, after going through Match.com financial statement of
affairs, it’s clear that all the assertions exist with no misstatement.
Valuation of accounts payable: Inventory should be acknowledged at the lower of the cost and
net possible value in accordance with the international Accounting Standard 2 Inventories.
Furthermore, check on any costs that could not be reasonably accounted to the cost of production
and any unexpected wastage have to be excluded for the cost of the inventory. Also ascertain any
conventional valuation basis that have been used to value inventory cost at end of the accounting
period. Match.com can record accounts payable and purchases net supplier discounts, this lowers
account payable. GAAP allows this method but Match.com should not be valued higher than
Running head: RISK ANALYSIS MEMO 6
15%. Therefore, considering this with the account payable (3.5%), its shows that there is no
In conclusion, the study recommends that a proper risk assessment should be established so that
any discrepancies in the financial records are corrected on time. It is also recommended that
before an auditor makes any engagement with the management, they should have proper
understanding of the organization that they intend to audit for the next one year.
REFERENCES
Bentley-Goode, K. A., Newton, N. J., & Thompson, A. M. (2017). Business Strategy, Internal
Control Over Financial Reporting, and Audit Reporting Quality. Auditing: A Journal of
Chepkwony, c. L., (2017). Audit of Statement of Financial Position (SFP) Items (1st ed.).
Peecher, M. (2017). SSA & Internal Controls; Sean Hillison Pinch Hitting For Mark Peecher;
Peecher, M. (2017). Strategic Analysis Of A Client And Its Business Processes. University of
Peecher, M. (2017). Wrap up internal control, Start significant business process: Inventory.
Saracco, C., & Ruzalski, E. (2017). IT Auditing: An instinct for growth (1st ed.). GrantThornton.
Running head: RISK ANALYSIS MEMO 7
Street, O. F., & Park, E., (2016). United States Securities And Exchange Commission
Vrijens, B., & Urquhart, J. (2014). Methods for measuring, enhancing, and accounting for
617-626.