ACT 575 CSU Global Module 8 Material Account Balances and Audit Committee Report

Option #1: Material Account Balances and the Audit Committee

Complete the following for each of the two companies selected for your Portfolio Project Milestone in Module 2:

Go to each company’s website and obtain the most current financial statements and audit report. Identify five material account balances from the financial statements. Since the auditor’s workpapers are not published, discuss audit planning and audit procedures that were potentially required for each of the account balances to support the audit findings presented in the audit report. Note: Essentially, you are working backwards!

Research the company’s Audit Committee’s (AC) Charter. Describe some of the items discussed in the AC’s review of the audit, such as the purpose of the company’s Audit Committee and their engagement with the external auditors.

Prepare a written report discussing each of the components above.

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Module 2: Portfolio Milestone
Patricia Cahill
Colorado State University Global
ACT 575: Advanced Auditing and Assurance Services
Dr. William Uzell
April 30, 2023
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Today, business organizations depend on external audit procedures in providing a fair
and accurate representation of their financial health. The external audit process enables business
organizations to plan transactions, identify risks, and validate financial transactions. The external
audit process requires business organizations to engage audit firms and adhere to both national
and international accounting standards. Specifically, Tesla and Toyota utilize financial audits in
promoting the credibility and dependability of their financial statement reports.
Tesla is a US-based multinational company that sells clean energy, electric vehicles,
vehicle accessories and parts, and energy storage products. Marc Tarpenning, Jeffrey Straubel,
Martin Eberhard, and Elon Musk established the company in 2003 to exploit the rapidly
expanding electric vehicle market. Today, the company has $509.05 billion in market
capitalization and employs 127,855 people. Today, the company produces electric vehicles,
vehicle accessories, and energy products at its factories in China (Shanghai), Germany
(Grünheide), Texas (Austin), and California (Fremont). In 2020, Tesla generated a total revenue
of $53.8 billion and a net profit of $12.58. Notably, the company depends on the PwC audit
report in demonstrating its financial statements’ validity.
Toyota is a Japanese multinational corporation that manufactures and sells vehicles, spare
parts, and vehicle-related accessories. Sakichi Toyoda established Toyota Corporation in 1926 to
produce automatic looms and started manufacturing automobiles in 1941. Today, the company
generates revenues through its financial services, automotive, telecommunications, and housing
segments. Financial statements indicate that the company has $183.90 billion in market
capitalization and employs around 372,817 people. Financial reports indicate that the company
generated $281.7 billion in revenues and $28.2 billion in net profit in 2022. Notably, Toyota
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depends on IFRS standards in preparing standard, transparent, and consistent annual financial
reports.
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References
Forbes. (2023). Tesla. Forbes. https://www.forbes.com/companies/tesla/?sh=5417a7c048d4
Forbes. (2023). Toyota Company Profile. Forbes.
https://www.forbes.com/companies/toyota-motor/?sh=4b17e18452bd
IBISWorld. (2023). Toyota Motor Corp: Company Profile. IBISWorld.
https://www.ibisworld.com/us/company/toyota-motor-corp/10379/
Kassem, R., & Higson, A. W. (2016). External auditors and corporate corruption: implications
for external audit regulators. Current Issues in Auditing, 10(1), P1-P10.
https://doi.org/10.2308/ciia-51391
WSJ. (2023). Tesla Inc. The Wall Street Journal.
https://www.wsj.com/market-data/quotes/TSLA/company-people

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