ACCT-402-06
Section #11898
Professor Gregory Njoes
Fall 2023
WRITING ASSIGNMENT GUIDELINES
Assignment Passed Out: September 28, 2023
Assignment Due Date: November 28, 2023, 8:00 pm submitted on Canvas
Topic – Background:
As discussed in the early chapters of our text, and specifically in Chapters 1 through 6, auditors
need to assess many risks when accepting a new audit engagement or determining that it is
appropriate to retain an audit client for each subsequent year.
This writing assignment will, therefore, be a case study for you to consider several of these risks
and the planning attributes for a real company; one that is an emerging high growth company in
the EV market with its headquarters in Irvine California. The Company has been an audit client of
KPMG LLP (“KPMG”), and KPMG continues to serve as the Independent Registered Public
Accounting Firm of the Company.
The name of the Company is Rivian (the “Company”). Rivian exists to create products
and services that help our planet transition to carbon neutral energy and transportation. Rivian
designs, develops and manufactures category-defining electric vehicles and accessories and sells
them directly to customers in the consumer and commercial markets. The Company has a 12/31
year-end.
The Company became a publicly traded Company in November 2021 through an initial
public offering of 176 million shares of Class A common stock at an offering price of $ 78 per
share raising $ 13.5 billion of cash proceeds. For fiscal year 2022, the Company adopted SOX
404 for the first time and KPMG performed an integrated audit issuing audit opinions on both the
effectiveness of internal controls and the financial statements. The financial statements for the
December 31,2022 audit were issued on February 28, 2023 and are included in the Company’s
Annual Report on Form 10-K.
Rivian’s common stock trades on the Nasdaq Global Select Market under the symbol
“RIVN”.
Rivian’s public filings with the Securities and Exchange Commission (SEC) can be found at the
SEC’s website through a search of the EDGAR archives at: www.sec.gov or on the Company’s
website under investor relations.
EDGAR Instructions: Go to www.sec.gov and begin your search by entering Rivian’s name
or ticker symbol at the “EDGAR | Company Filings” search box and selecting Rivian. The EDGAR
Search Results will display a historical listing of the Company’s filings. Click through on the
“Documents” indicator for the selected filing and you will then be led to a listing of the main body
and exhibits for the filing selected.
Topic – Assignment:
Assume that you have just joined KPMG and are assigned to the upcoming fiscal 2023 (year
ending December 31, 2023) integrated audit of Rivian.
In order to get familiar with the entity, you are requested to read information about the client. At
a minimum, your supervisors ask you to read the most recent Annual Report on Form 10-K and
(year ended December 31, 2022, which was filed on February 28, 2023, Proxy Statement
(referenced as the DEF14A, as filed in 2022, the most current Quarterly Reports on Form 10-Q for
the Quarters ended March 31, 2023 (Q1) and June 30, 2023 (Q2), filed in 2023 as well as other
periodic (Qs/Ks, etc.) and/or event reports (8-Ks) on file as necessary including the 8-K that
includes the Company’s 2022 earnings release which was filed on February 28, 2023 and the Q1
2023 and Q2 2023 which were filed during 2023. You may also find it worthwhile to perform a
Google, Yahoo, or other search to find information on Rivian; and/or visit the Company’s website
and you can also maybe event listen to a recording of the Company’s earnings release on March
1st, 2023, for 2022 and the earning conference calls for Q1 and Q2 2023.
Based on the information you find in the Company’s filings with the SEC, and/or any other
resource you deem appropriate (such as industry information, news reports, company website, etc.)
write a narrative for the planning section of the audit working papers for the 2023 fiscal year
that discusses the following:
COMPANY RISKS:
Enterprise Risk / Business Risk– those risks that affect Rivian’s operations and overall
organizational activities. In preparing this section, you are primarily to focus on the nature
of the Company’s business and the related environmental factors which affect it, and your
perceptions of the inherent risk factors involved.
Information Risk – those risks of disseminating misstated information to users of the
financial statements. In preparing this section, consider who the potential users are of
Advantages financial statements (known, foreseen, and foreseeable users – See Textbook
Chapter 4) and those areas that may be (more) susceptible to risks in reporting. What areas
might require special attention during our audit so that we minimize our Audit Risk?
AUDITOR CONCERNS:
Engagement Risk – those concerns that we, the auditors should consider as we review our
client retention decision for the 2023 fiscal year-end audit. Have there been any changes
in the environment since completion of the December 31, 2022, audit.
Materiality – the magnitude of a misstatement or omission that could affect the user of the
Company’s financial statements and related data. Without trying to calculate any “value”
for materiality, discuss your observations about the Company that may affect your views
on the “qualitative aspects” that should be considered for the level of overall materiality to
be used for purposes of conducting the audit. Also, provide your thoughts on your
considerations of qualitative factors that should be considered in determining performance
materiality haircut.
Consider those balances/transaction cycles you consider to be significant as well as trends,
ratios, or other information that would have a bearing on your determination of materiality
for purposes of the audit. In particular, consider the financial information provided to Wall
Street analysts and what Wall Street consensus estimates are developed for the Company.
Fraud Risk – the risk that management may intentionally prepare financial statements that
are materially misstated and/or omit key disclosures AND/OR that there may be
misstatements resulting from misappropriation of assets (Chapter 6). Giving consideration
to Fraud Risk Factors, such as Incentives/Pressures, Opportunities and
Attitudes/Rationalization as described in Appendix 6B to Chapter 6, what specific risks, or
situations, would you expect to identify from/contribute to a brainstorming session with
members of the engagement team that should be evaluated as part of our audit?
Audit Risk – the risk that we could issue an unqualified/unmodified audit opinion on
financial statements which include a material misstatement (Chapters 2 and 5). Giving
consideration to materiality and fraud risks (above), what are the specific areas on which
we should focus to reduce our audit risk to an acceptably low level?
You are not charged with reaching a conclusion in any of these areas but to identify the key
items affecting the decisions to be made by your supervisors.
Guidance:
Papers should be a minimum of 6 pages, typed, double-spaced (assuming a 12-pitch font). Please
do not find yourself writing more than 8-9 pages of narrative. CAUTION: While there may be
many details and “sub-topics” you wish to discuss in your presentation, a better approach will be
to focus on a few key topics with well-developed supporting discussion/arguments.
Your paper is to be based on your analyses of the specific conditions of Rivian and your
knowledge of auditing gained through early chapters in our text. The concepts were introduced in
Chapters 1-6. However, you may find information useful in future class discussions and or later
chapters of the text (some information for which I encourage you to read ahead). Your ideas need
to be clearly identified and supported throughout your presentation.
Your paper should be presented in the format of a file memorandum to the audit file.
Please note that while I have working knowledge of this Company, I cannot discuss any details
about the Company that is not part of the public disclosures. Should you need assistance
understanding what you are reading in the public documents, please ask. Further, you cannot
contact anyone at the Company or any other person at KPMG to discuss this project.
Grading:
This assignment represents 75 of the possible 525 grade points for this class and therefore
should be given appropriate attention.
As noted in the syllabus, your paper will be graded for coherence, conciseness, clarity and use of
Standard English. Of course, your paper should adequately address the topic assigned. A
formal bibliography is not required. However, if you quote a source directly (such as a news
article, textbook, information on websites or other sources), your source should be footnoted or
‘in-line referenced’, at a minimum. Your work should also be original – not plagiarized from
news articles or copied from classmates (after all – our profession is built on the foundation of
ethics and integrity).
Now, a few words on the standards set at the outset of this paragraph:
Coherence – Requires that ideas be arranged logically in that the ideas are related.
Conciseness – Achieved by using as few words as possible to make your point, while not omitting
key ideas or supporting arguments.
Clarity – Essentially, your paper should be understandable and readable. Clarity requires the use
of words with specific and precise meaning. Simple sentence structure will assist with both clarity
and coherence.
Standard English – Requires the use of proper punctuation, capitalization, spelling and
vocabulary. Please use the spell and grammar check functions in your word processing software.
Due Date / Submission:
Papers are to be submitted electronically in WORD or PDF in CANVAS.
Papers must be received by 8:00 pm on November 28, 2023, to be considered timely.
Grade Penalties will be assessed for late submissions without a valid pre-approved reason.
