Dell Auditing Essay
Dell’s products can be separated by home and working sections. For personal clients Dell provide personal laptops, desktops, tablets and a sort of accessories. For enterprise and government users, Dell provide office equipment such as PCs, monitors, printers & electronics and Tablets. Workstations and services focus on servers, solutions and software.
Competitors of Dell including Lenovo, Apple, Hewlett-Packard, Asus and so on.
Based on the advantages of stability and advanced technology, the main part of the customers of Dell are government, enterprise and different institutions. The other part of Dell’s customer is family and personal users which focus on PCs, laptops and personal data services.
Dell’s global strategy made a wide and lengthy supply chain. 95% of its suppliers with including AMD, Hitachi, Microsoft and Samsung has been disclosed on the website http://www.dell.com/learn/us/en/uscorp1/corp-comm/cr-ca-list-suppliers
How does Dell market and distribute its products?
For personal clients, Dell’s strategy is to customize its products in order to satisfy potential buyers’ requirement. One of the example is the Alienware Gaming PCs, which is designed and manufactured for high standard game player, Dell presented fashion appearance to attract teenagers and powerful performance to fulfill customers who is seeking perfect game experience. Products can be made for different functions and added distinguished accessories. To deal with the large orders from enterprises, government departments and institutions, Dell serves products and services with lower price and higher stability. Under this circumstances, customers will tend to choose Dell’s products constantly and may introduce them to other potential users.
What is Dell’s business strategy?
Dell is an obviously cost leadership company. Rely on the efficient supply chain, Dell gained superior price advantage. On the tablet and laptop market Dell has to face strong competition from Apple and Samsung but it was still the largest revenue contributor (31% according 10K) because the lower price in 2012. Dell also attempted on Alienware series to enter high performance PC market. Generally, the sources of Dell’s revenue was almost equally provided by enterprise solutions (46%) and services and Personal Client (54%).
What are critical business processes for Dell given its basic business strategy? Dell’s cost leadership strategy is mainly supported by its efficient supply chain management. Suppliers for Dell are globally and widely separated in different businesses. Based on the supply system, Dell could ensure lower accessory price and negotiation advantages. Outsource manufacturing and services decreased the inventory and financial risk, which is normally in high technology industry because of product replacement.
What accounting information is associated with the critical business processes and how does Dell measure up on that information? Cost of goods sold, inventory, account payable and revenues.
What accounting methods does Dell use to report the accounting information associated with critical business processes and what is the risk of material misstatement? Dell uses FIFO to report inventory and revenue is recognized on the moment of shipment. The amount of account receivable is almost half of the current asset which means the highly risk of income statement adjustment. Inventory has been kept in lower level, consider about the return and exchange service, the number of inventory might be misstated either.
Professional auditing standards provide guidance on the auditor’s consideration of an entity’s business risks. What is the auditor’s objective for understanding an entity’s business risks? Why does an auditor not have responsibility to identify or assess all business risks? Provide some examples of business risks associated with an entity that an auditor should consider when performing an audit. The purpose of business risks understanding is to offer auditors capability to recognize possible misstatement and make analysis and adjustment. Audit report will be more efficient and reasonable with support of business expertise. Auditors did not participate management process of the company, and sometimes material or highly material information will be presented to auditors. Auditor’s scope may be restricted or independence influence the accuracy of audit report.