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.