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Asher Farms Case Essay

1 and 2) Political: The tax rates on the products would effect the costs for the company and be reflected in the income statement.

Economic: The demand of an inferior meet like chicken to beef could potential improve revenue. Chickens would be easy to care for and keep costs a little lower compared to cattle.

Social: Animal rights groups can change public opinion of the company and potential take away revenue if the animals aren’t treated all.

Technological: Any genetic modifications could potential reduce the cost of sales. If you could make a bigger chicken or one that matures faster, it would allow the company to make more money and spend less.

Legal: Should any food borne illness arises the company would be liable. This would lead to costly lawsuits effecting the balance sheet.

Environmental: The disposal of remains and wastes a cost the company has to consider. Also where it is deposed might be far away from where the animals are held depending on the health guidelines. This would lead to higher costs reflected on the income statement.

3) a) The auditor’s objective is to check for a going concern issue within the companies financials

b) There are two levels of assurance absolute which is rarely given and reasonable. An auditor usually gives reasonable assurance because checking every single detail in the company’s records would take a great deal of time.

c) Some business risks the auditor should consider are the company’s competitive position within their files. Also what internal controls already in place to catch mistakes and the company’s overall organizational structure. ‘

d) The level of materiality for example a couple of missing pencils would not be considered a risk for misstatement in the financials. Depending on the size of the company $5,000 might not even be a high level of material at a $10,000,000 company.


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