After reading the Comptronix, Inc. narrative and analyzing the supporting excel files, I have based my risk assessment of the company on my analytical risk assessment procedures performed. In the subsequent paragraphs, I will perform analytical risk assessment procedures related to Comptronix and an overall analysis of the case in terms of the fraud risk factors discussed in the readings. Analytical Procedures AU-C Section 500 defines analytical procedures as, “evaluations of financial information through analysis of plausible relationships among both financial and nonfinancial data.” My firm performed analytical procedures to look at the relationship of net income to cash flows from operations, and changes in inventory, accounts payable, sales, and cost of sales from prior period to current period. We did not identify any one account to be a significant deviation from another. After performing analytical procedures on the stock price activity for Comptronix and ownership interests, we have identified a significant deviation of stock price activity and shares outstanding for Comptronix from 2001 to 2002. We identified that the shares outstanding in 2001 increased by almost 26 percent in 2002. Additionally, we found that Comptronix’s officers and directors own over 18 percent of the total shares outstanding. Moreover, of the group of officers and directors who collectively own more than 18 percent of the total shares outstanding in the company, the CEO and COO of Comptronix and the Principal of the venture capital firm, who acquired a 15% ownership interest in Comptronix, collectively own more than 86 percent of the total common shares owned by the officer and director group. …show more content…
We found Comptronix’s financial performance to be more comparable to the financial performance of Solectron than we did to the financial performance of SCI