- Prepare common-sized balance sheets and income statements for Just for Feet for the period. Also compute key liquidity, solvency, activity, and profitability ratios for 1997 and 1998. Given these data, comment on what you believe were the high-risk financial statement items for the 1998 Just for Feet audit.
- Identify internal control risks common to large, high-volume retail businesses like Just for Feet and discuss how these risks should influence audit planning decisions.
- Identify inherent risk factors common to businesses operating in highly competitive industries and detail how these should affect audit planning decisions.
- Prepare a comprehensive list, in bullet format, of the audit risk factors present for the 1998 Just for Feet audit. Rank these five audit risk factors from least to most critical and justify your rankings.
- Assess whether Deloitte auditors responded appropriately to these top five audit risk factors, defending your evaluation from the perspective of Thomas Shine.
- Describe how you would have responded to Don-Allen Ruttenberg’s request to send a false confirmation to Deloitte & Touche, considering the parties affected by this decision.
