To:

Students in ACC5400

From: Professor Barton

Re:

Audit Case 2 SKI

Date assigned: 11/23/2016

Date due: 12/12, turn in via Blackboard

The purpose of this memorandum is to document the procedures and requirements for
Audit case 2: Social Konnections, Inc. This case was adapted from the Trueblood case series by
Deloitte & Touche.
You will find all necessary background information on the company within the attached
pdf provided, however, you will need to reference external materials regarding auditing
standards, etc. The final product of this case will be a memorandum addressing your answers to
the questions found herein. The memo should be in a concise and clear format, explaining not
only your conclusions but also how you reached those conclusions. Your memo should be single
spaced (with double spaces between paragraphs) with normal fonts and margins. There is no
page limit on this assignment, however, please be concise.
NOTE: You may work with a group of up to 5 people on this case (or work on this case
individually), but you may not share information (or written work) between groups while
working on this case. This will be considered plagiarism/cheating. You must submit this case
through Blackboard, and it will be screened using SafeAssign software, which will compare your
groups work on this case to the work of other groups & to all electronically accessible
information on the internet as a whole. Because of this, if you use sources (which I encourage
you to do), you must cite them. <<Also please note that attributing a quote to someone is not the
same thing as a citation and I will take points off for thisif you say the SEC chairman said
XYZ and dont cite a source, then you are failing to cite unless you interviewed the SEC
chairman personally >>
Required: Prepare a written memorandum documenting your answers to the three following
questions (Note: The effort you put forth in your memo will be considered by me when grading
this assignment a 3 page memo that thoroughly and thoughtfully answers the below 3 questions
will receive a more favorable grade than a < 1 page memo that gives brief, undetailed responses
& merely checks the box to show you have some type of answer for each question. To nonnative speakers it is okay if your English isnt 100% perfect, but I do need to understand what
you are trying to say. It is also ok to visit the writing center to obtain assistance with this
assignment (& I encourage you to do so).) :
1. Identify the potential revenue recognition issues related to each of the Companys sources
of revenue. (You may want to consider and make reference to SEC Staff Accounting
Bulletins No. 101 &/or 104 in your response).

2. On the basis of the information Ms. Drew has learned, what fraud risk factors should she
consider discussing with her team at the next fraud brainstorming meeting? (You may
want to consider and make reference to PCAOB AU Section 316, Consideration of Fraud
in a Financial Statement Audit when formulating your response.)
3. What potential audit procedures could the team consider to evaluate managements
revenue recognition policies and determine whether those policies are appropriately
applied?