Intense Fitness Limited

Intense Fitness Limited - May Arlynne Marcelo Student...

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May Arlynne Marcelo Student # 209106337 05/19/2011 Intense Fitness Limited (IFL) 1. The three business risks are profitability issues in regards to the 6 clubs that are operating below breakeven membership levels, IFL’s competitive environment (new home fitness methods, 30% less membership fees at other gyms, increased number of gyms in the area), and the $400,00 lawsuit . These are important considerations for the auditor because it serves as an incentive for the management to be bias considering that IFL also has a loan agreement which requires them to maintain a certain level of current ratio and net income before taxes and management bonus. These risks increase the chance of having material misstatements on the IFL’s financial statements that the auditor should be aware of. 2. The factors affecting inherent risk in IFL include Ralph’s lack of management integrity causing him to rely solely to the bookkeeper’s preparation of financial statements. Last year’s significant material adjustments because of the
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This note was uploaded on 09/29/2011 for the course ADMS 4551 taught by Professor Iacobelli during the Spring '11 term at York University.

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Intense Fitness Limited - May Arlynne Marcelo Student...

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