Big Box Home Improvement and Match.Com Audit Case Analysis
Autor: citifox7 • April 10, 2012 • Case Study • 694 Words (3 Pages) • 1,518 Views
Big Box Home Improvement Incorporated
Big Box Home Improvement Incorporated is fast growing and expanding drastically each year. Given their strategy, there are many risks (listed in the case) that could impact their business.
Risk 1: Lack of adequate market and customer research
Control: Formal market and customer research process, including post-launch
Risk 1 could impact construction-in-progress (CIP) due to lack of sufficient market and customer research. One way that it would directly affect Big Box Home Improvement is in their estimates of how large of a store to build. If they overestimate the size of the customer base, they could make too large of store with no customers to sell too. This could materially affect CIP by making it look more favorable than what the future will show.
Risk 2: Cost overruns
Control: Capital expenditure approval procedures and project management procedures
Risk 2 could impact CIP due to cost overruns. If there a cost overruns, a manager could be interested in manipulating the data to appear that they did not go over costs by allocated the expenses to other areas. This could inflate CIP even though costs were incurred. In addition, this is why having capital expenditure approval procedures and project management procedures in place to mitigate the risk.
Risk 3: Community rejects a new store site
Control: Careful site selection, including zoning research and proactive community intervention
Risk 3 could impact CIP greatly due to the community being able to affect the development of construction. For example, Wal-Mart made a huge superstore between Indiana and Oxford then abandoned the location. In the future, community members are probably more against significant construction projects unless it is eco-friendly. If the community rallies against Big Box, then they could face significant problems. Risk 3 is significant and should be taken into consideration on how to welcomed by a community.
As for questions 1a, 2, and 3, you would test the controls in place by sampling the transactions depending on the frequency
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