Pricesmart, Inc, of San Diego, California (symbol PSMT) 10-K for the year ended

Question

Pricesmart, Inc, of San Diego, California (symbol PSMT) 10-K for the year ended August 31, 2015, filed with the SEC October 29, 2015

For the company selected, go to their web site and a web site independent of the company that provides financial information and familiarize yourself with information regarding the company including the Company’s annual filing on Form 10-K and answer the following questions:

1.     What kind of opinion has the audit firm issued on the financial statements and the system of internal control? Anything appearing unusual about the reports(financial statements and internal controls) from the independent auditors?

2.     What is the company’s industry and identify one unique risk factor for that industry?

3.     List one competitor for the company. How does the company compare (market share, size, etc) to this competitor?

Part I

1.     Identify what you think would be a specific risk in the audit of this company(NOT an inherent risk of the industry) and describe:

(A) The audit risk;

(B) Why you think this is a risk related to the audit; and

(C) How you might change your audit procedures to address this risk. Include references to the financial statements in your comments, and if you are making assumptions, state those assumptions.

2.     Identify a significant account grouping on the balance sheet and suggest some procedures you think the audit team would use to complete their audit work on the these accounts. (Examples – cash accounts or accounts receivables or inventory)

For the company selected, go to their web site and a web site independent of the company that provides financial information and familiarize yourself with information regarding the company including the Company’s annual filing on Form 10-K and answer the following questions:

Explanation / Answer

1) As per our opinion, PriceSmart Inc. is an online shopping site which has spread its wings all acroos the globe. In such an Industry, there is vast variety of items available alongwith with different kind of Vendors. Such organisation act as the intermidiaries between seller and the prospective customers and charge a nominal commision for such exchange. Such awards and commissions etc. has been based on the contracts done.

Master should be maintained for each such Vendor on the plotform and as an Internal Auditor, all conditions mentioned in the agreement should be checked with Master maintained in Software. Then income of company can be checked on the basis of total sales volume w.r.t. commission randomly on the spreadsheets also. Internal Auditor should act as system auditor in such type of E-commerce companies.

2) Price Smart Inc. appears to be an E-Commerce company. One unique risk factor for such industry is that this is technology based industries and such industries has to be updated every while in order to be in market and for serach of each sector of customers.

3) In India, many companies like Snapdeal, Flipcart, Amazon etc. are there in such competition

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