A. Assignment 3.1.1.

a. Describe the reasons for performing an analysis of the industry and market (5pts)

 Performing an analysis in terms of industry helps a business to understand market

conditions. It helps them forecast demand and supply and, consequently, financial
returns from the business.
 In industry analysis, it indicates the competitiveness of the industry and costs associated
with entering and exiting the industry.
 Industry analysis helps to identify which stage an industry is currently in, whether it is
still growing and there is scope to reap benefits, or has it reached its saturation point.
 Industry analysis is a tool that many businesses use to assess the market. It is used by
market analysts, as well as by business owners, to figure out how the industry dynamics
work for the specific industry studied. Industry analysis helps the analyst develop strong
sense of what is going on in the industry.

 Effective market analysis can help in getting valuable insights into shifts in the economy,
competitors, ongoing market trends, demographics, and the traits of customers'
expenditure. 
 Market analysis is one of the vital components to help business with all the essential
information and making wise business decisions.
 A market analysis is a thorough assessment of a market within a specific industry. With
this analysis, you will study the dynamics of your market, such as volume and value,
potential customer segments, buying patterns, competition, and other important
factors. 

b. Explain the foregoing workflow activities (1-5) performed within the stage as enumerated
in the foregoing paragraph using the methods ( Porter's Five Forces and PEST methods) (10
pts)

Porter’s Five forces that shape industry:

 1. Rivalry - captures the extent to which the nature of competition between competitors
enhances or destroys industry profitability.
2. Threat of entrants - captures the extent to which the entry of new companies into the
industry enhances or destroys industry profitability.
3. Buyer Power - captures the extent to which customers have power to negotiate more
value and lower prices. Buyers tend to have more power when there are fewer buyers
than companies in the industry.
4. Supplier Power - captures the extent to which suppliers have power to negotiate for
higher prices from companies in our industry.
5. Threat of substitute - captures the extent to which the other companies that do the
same job as the companies in your industry but in different ways.
6. (as additional) Existence of Complements - captures the extent to which there are other
products and services that increase demand for the job customers hire your industry to
do.

PEST method:
 Helps in answering questions of opportunities like deciding whether to develop a new
product or expand into a new company. The idea is that we have to understand what’s
changing in the world. It is a simple and widely used tool that helps you analyze the
Political, Economic, Socio-Cultural, and Technological changes in your business
environment. This helps you understand the "big picture" forces of change that you're
exposed to, and, from this, take advantage of the opportunities that they present.

These are the factors:

 Political - Politics and action of the government. The political environment is an analysis
of what politics is doing to the business world.
 Economic - The shifting demographics and fiscal policy etc. The economic factor
examines outside economic issues that can play a role in a company's success. For this
 analysis, look at interest rates, exchange inflation, unemployment, gross domestic
product, credit availability and rise and fall of the middle class.
 Social - These are career expectations and educational levels etc. With the social factor,
a business can analyze the socioeconomic environment of the given industry's market to
understand how consumer needs are shaped and what brings them to the market for a
purchase. Among the items that should be examined are demographics, population
growth rates, age distribution, attitudes toward work and job market trends.
 Technological - The big technology shifts. Technology plays a huge part in business, and
it can impact it either negatively or positively. With the introduction of new products,
new technologies and services, a certain marketplace can have a tough time adjusting so
it's important to assess the technology from all angles.

B. Assignment 3.1. 2: With the following video,

a. Describe the reasons for performing an analysis of the client's business and industry. (5pts)

Auditors need an understanding of the client's business and industry because the nature of the
business and industry affect business risk and the risk of material misstatements in the financial
statements. Auditors use the knowledge of these risks to determine the appropriate extent of
further audit procedures. Obtaining an understanding of the client’s business is key to an
effective and efficient audit. It enables us not only to tailor our work to meet the individual
facts and circumstances of each client, but also to carry out that work and to evaluate our
findings in an informed manner. Our knowledge of the client’s business also helps us to develop
and maintain a positive professional relationship with the client.

b. Explain the various foregoing activities (1-15) performed within the stage. (15pts)
1. Industry and External Environment - Risk associated with specific industries may affect the
auditor’s assessment of client business risk. They are common to all clients in certain industries.
Many industries have unique accounting requirements that the auditor must understand.
2. Business Operations and Processes - The auditor should understand factors such as major
sources of revenue, key customers and suppliers, sources of financing and information about
related parties that may increase client business risk.
 Tour client facilities
 Identify related parties
 Inquire of management
3. Management and Governance - The auditor needs to assess management's philosophy and
operating style and its ability to identify and respond to risk.
 Read the corporate charter and bylaws or code of ethics, 
 Read minutes of board of directors and stockholders
 Inquire of management.

4. Objectives and Strategies -The auditor should understand the client’s objectives regarding
their objectives for the:
 reliability of financial reporting, 
 effectiveness and efficiency of operations, and 
 compliance with laws and regulations; read contracts and other legal documents, such
as those for notes and bonds payable, stock options, and pension plans.

5. Measurement and Performance - A client’s performance measurement system includes key

performance indicators that management uses to evaluate progress toward its objectives. Like:
 Market share
 Sales per employee
 Unit sales growth
 Read financial statements,
 Perform ratio analysis, and 
 Inquire of management about key performance indicators that management uses to
measure progress toward its objectives.
C. Assignment 3.1.3. With the following video,

a. Understand and describe how each critical process workflow activities operates. (5pts)
 Business process helps you look at what the need is, what the scope is and what
problems we should solve with this process. It is a step-by-step sequence of events that
is performed by a business user to achieve a specific goal.

Creating business process includes:

 Statement of scope or purpose

 Desired outcome of the process
 Process description
 Business rules
 Entry criteria or inputs
 Exit criteria or output
 Process flow

Critical client flow:

1. Attention - You have to grab their attention

2. Engagement - You have to engage them
3. Enquiry -  making an inquiry 
4. Sales - how it is converted to sales
5. Money - After making a sale you take money upfront
6. Deliver - deliver the product that you are serving

b. From those identified critical business process; identify significant accounting transactions
and financial statement implications. (5pts)
 Having Sales
 Inventory purchases
 Collecting and receiving receivables
  Purchasing of noncurrent asset
 Paying liabilities

c. Identify the reasons for performing an analysis of the critical business operations workflow
activities. (5pts)

Critical business processes and functions are those that have the greatest impact on your
company’s operations and need for recovery. Almost everyone working in a company has an
innate understanding of the mission-critical operations within their department.  It helps to
increase the efficiency and effectiveness of a process. It assesses how well the process achieves
its end goal. Business process analysis identifies and examines every part of the structure,
including the process itself, the participating parties, the information exchange, and others.
Accordingly, it can help identify potential improvements within the process, making it easier to
carry out a re-engineering initiative sometime down the line. 
Business process analysis can be helpful with:

 Finding the reasons behind systematic delays

 Clearing out the right way of doing the process
 Determining whether or not the process is operating at maximum potential capacity
 Finding out whether the process should be improved or re-engineered

d. Explain the various foregoing activities (1-10) performed within the stage. (10pts)

1. Customer Strategy & Relationships Process

Most businesses talk about the customer being the most important part of any business.  There
are policies and procedures to help you set marketing strategy, marketing tactics, and
marketing planning to cover the first part of your marketing sales funnel — awareness and
education.
2. Employee Development & Satisfaction Process
Your workers are essential to your business because your employees are the ones that talk to
and develop your customers.  Keeping employees and facilities safe is the focus, which includes
coverage of guard force management, employee conduct, emergency operations, protection,
and safety.
3. Quality, Process Improvement & Change Management Process
Quality is driven by competition, your desire to excel at what you do and make your customers
happy. 
4. Financial Analysis, Reporting, & Capital Management
Management by fact is critical to fast growth companies.  Cash is the lifeblood of your company
and a fast growth company consumes cash quickly.  There are department procedures for
financial administration, raising capital, managing capital, financial statement reporting, and the
internal controls necessary in a fast growth company. 
5. Management Responsibility Process
Business process management is integral to every area of your company.  Every manual in the
CEO Series covers the management of that departmental area.  Each manual provides a
departmental (functional) manager’s manual that describes the departmental organization
structure, major responsibilities, departmental guidelines, ethics, policies, and – of course – the
primary business processes for that department.  
6. Customer Acquisition Process
Sales is about engaging your customer and closing the sale.  There should be procedures for the
entire sales funnel, sales process, sales administration and sales management common to
organizations that have to oversee a sales force.  It must contains procedures for controlling
cash and the revenue cycle, which is a parallel and supporting activity to the sales process.
7. Product Development Process
In order to create new products, you must obtain requirements from sales and develop
products that satisfy the customer.  Must contains procedures for customer requirements, as
well as the design and development of new products.
8. Product/Service Delivery Process
Procedures for shipping, receiving, and inventory control.  Should also provide coverage of this
critical customer facing area.
9. Accounting Policy Management Process
Maintaining your chart of accounts, bookkeeping, and watching your accounting cycles is about
transaction management, as opposed to finance which is focused more on raising, managing,
and using cash effectively.  Focus is on controlling operating cash receipts, cash disbursements,
inventory and assets, the revenue cycle, and general accounting administration.
10. Technology Management Process
 The IT policies and procedures must contain procedures for IT administration, IT asset
management, IT training, technical support, IT security, IT disaster recovery, and software
development. 

I affirm that I have not given or received any unauthorized help in this assignment and that
this work is my own.