Group Case #3 [Winter Quarter, 2012]: Strategic Analysis, Value Chains and Business Processes [ 20 point case ]

The value chain approach to business (process) modeling is useful for developing an understanding of how a client runs its business. It is particularly useful for identifying the critical success factors that have the most impact on the clients ability to succeed by highlighting areas of the organizations operations where operating risks are most severe. Many of a clients operating risks also relate to audit risks that concern the auditor and that must be considered in planning the engagement. As a result, a carefully constructed model of a clients value chain is useful for audit planning. Requirements: For the indicated business organizations and, based on the approach taken in Ch. 6, prepare a business process model analysis that will be of use to our audit teams. If possible, visit such an organization. If not, base the specification of activities within the value chain on your own experiences, your general understanding of the business and research you conduct on the particular type of organization you are assigned. The value chain should be detailed enough that you can describe the key [audit relevant] types of activities or business processes that comprise the value chain that apply to your organization. In your report, please include and discuss for the organization you are analyzing: a) An value chain model [see Figs 6-2 & 6-3] b) A Process Map [Objectives, activities, information flows and important accounting impact transactions within the process [Fig 6-4] for the most important audit sensitive primary process, (Inbound Logistics; Operations; Marketing & Sales; Outbound Logistics or Customer Service). Indicate why it is the most important. c) An Internal Threat Analysis [identify process risks & potential audit implications]. [Fig. 6-5] d) An annotated Risk Map [ Fig 6-8] Be sure to identify at least 3 potential audit risk(s) that the auditor should consider in planning the engagement. Plot these within your Risk Map and discuss why they are important to the audit, why they are placed in a particular quadrant in the Risk Map and how the audit should conducted to take account of these risks [fig 6-7 may be useful to summarize part of your analysis/findings].

Organizations to Study: Groups 1, 5 and 9: Pizzeria Groups 2 & 6: Auto repair shop Groups 3 & 7: Coffee shop. Groups 4 & 8: Bookstore