Auditing

Running Head: AUDITING
AUDITING
Name of the Student
Name of the University
Author Note

1AUDITING
To: Ernie Kerst
From: James Kluge
Date: April, 2019
Re: Second Cup Coffee Co
The team of our company has agreed for auditing. Hence, for the verification of the financial
statements, there are certain areas that have to be looked. This audit memo will be helpful in
identifying the ongoing the current issues during the auditing of the financial statements.
Business Information
Second Cup Coffee Co is company, which is Canadian based retailer of coffee, headquartered
in Toronto. It operates their café under the trade name of Second Cup. The company’s shares
are traded on Toronto Stock Exchange under the symbol of “SCU”. Every year company has
the market capitalization of $37 million and it generates the total revenue growth of $28.06%.
The total assets value of the company is $44.7 Million in the year 2017. The company has
reported highest full year profit during four years. The company has zero-debt on their
balance sheet and they can easily maximize the returns of the capital because of lower cost of
capital.
Risk Assessment
In the auditing of the financial statements of Second Cup Coffee Co, the risk assessment was
done. Under the risk assessment, audit risk was done and it has been observed that there was
low audit risk of the company. Inherent risk of the company was high risk; it is because
forward looking statements regarding the estimates, expectations, forecasts and objectives for
which they does not give any assurances. They made statements regarding intention for using
the net proceeds of offerings for the conversion costs that are related to strategic alliance