Audit Outline Plan for Apple Corporation

Junior (College 3rd year) ・Art ・APA ・3 Sources

The audit plan that will be used for Apple will cover topics that are significant for any company, but especially for the technology industry, in which Apple is a leader. The audit will be based in part on some of the items listed below. Cybersecurity is something that Apple, like all other businesses with an online presence, needs to pay close attention to. For Apple, maintaining its cyber security is essential to protecting both its reputation and the future viability of its business (Arens, et al, 2012). The audit plan should aim to establish that Apple has a high quality security system which safeguards its systems from unauthorised access and malicious access since it could make the business lose its reputation as a producer of high quality technology products. The audit process should involve a thorough risk assessment, and controls out in place to secure the company. The security framework should be reviewed for alignment with regulations, and its rules of engagement with third parties. There should be a clear security incidents response communication plan.

Mergers and acquisitions- Like other companies, Apple has enjoyed both organic and inorganic growth. The mergers and acquisitions should be conducted diligently, and with the use of hard evidence. The audit should focus on after – the fact reviews of deal to check whether they make economic sense, and whether they followed the established rules and regulations. The audit should examine the level of collaboration between the two entities’ teams (Scot, 2006). Financial and other policies should be well aligned as a result of the collaboration as should be the absence of material misstatements in financial statements.

Taxation – As a multinational company, Apple finds itself under various tax regimes. It is important to be conversant with the rules which apply in each of these regimes, and take up strategic plan of tax issues. This helps in not only avoiding stiff penalties, but also in mitigating legal challenges and damage to reputation. The audit should therefore help management in ensuring compliance with tax rules and ensure that the rules so applied do not damage the organization’s long term survival. Automated tax programs, transparency initiatives and plans to ensure sound response to the changing environment should also be reviewed for compliance.

Data governance – Apple’s data is a major part of its assets. The company should have a strong data governance structure which ensures the availability, utility and integrity of data. The audit plan should therefore aim to review the methods used by Apple to collect information about its products, competitors and clients (Arens, et al, 2012). This review should aim to establish the lawfulness of the operations, and point out any areas in need of improvement or other modification. Security gaps should be identified, and ways of closing them recommended. Other areas should in clued business continuity management, response to competition, internal audit and risk management among others.

Case Study #2 – Evidence to gather

The evidence to be gathered will follow the outline discussed above. In relation to the need to establish whether the company has the right mechanism to counter cyber threats, the audit will collect information relating to the security system and other mechanisms. The time taken before the system is updated should be noted, as well as how long the system has been used (Finkle & Todd, 2011). The number of breaches should be noted, as well as any fines or warnings the company has received due to unsatisfactory security.

The gain and loss as a result of mergers and acquisitions should be addressed. In particular, the company should clearly note the change in the company’s fortunes as a result of the particular merger. The risks of the merger should be noted, such as the acquired company’s past failure to comply with laws, run at a loss, and failure to adopt effective strategy. The blending of rules between the previously separate entities should e reviewed, to measure the level of collaboration between the merger teams.

In regard to taxation and data governance, the audit should aim to find out the current tax policy by the organization, and establish its alignment with specific tax codes. Previous run-ins with the law on the issue should also be noted (Arens, et al, 2012). Interviews with relevant managers and employees should be conducted to measure appreciation of tax laws and significance to the bottom-line and long-term survival of the business. Internal audit and risk management should be reviewed, so as to note the existing controls in the business, and to collect information regarding issues that should be of audit concern. The risk management approach should be reviewed.

Case Study #3 – establishing, analysing and reporting materiality

Establishing materiality

The establishment of materiality will follow General Accepted Accounting Principles relating to the same. These will include all those omissions, misstatements that could individually or together potentially lead to a misleading financial, security or legal position of the organization. The materiality should therefore be considered in terms of those facts about the acquisition that were not disclosed, and whose disclosure significantly changes the decision-making of Apple. In terms of cyber security, the misstatement or error should be big enough to attract legal challenges, or prove insufficient in countering cyber threats. This may all lead to inaccurate decisions being made by investors (Finkle & Todd, 2011). Materiality can also be established through the establishment of tax policies and strategies which could potentially lead to the loss of significant amounts of money in fines and legal fines. All these issues need to be addressed in relation to whether the potential loss could be equal or more than 5% of the company’s net operating income.

Analysing materiality

Having established materiality, the events or instances which should be looked at are then analysed. The analysis will involve determination of whether the level of materiality could potentially be quantified to more than 5% of the organization’s income (Scot, 2006). The analysis should also involve a quantification of other material issues identified, so that they can all be defined in terms of whether they can potentially equal or be more than 5% of the firm/s net operating profits.

Reporting materiality

Having measured the test, the materiality should then be well described, including a description of the plethora of instances through which it could injure the organization. This should then be reported in the audit report (Arens, et al, 2012). In instances where the materiality could have affected the financial reports significantly, the report should be qualified, with the material issues being well presented. This will give the organization the necessary opportunity to consider them, and address them.


Arens, A., & Elder, R., & Beasley, M. (2012). Auditing and Assurance Services (14th Edition). New Jersey: Prentice Hall

Finkle, M., & Todd, A. (2011). Apple Inc.: Product Portfolio Analysis. Journal of the International Academy for Case Studies, vol. 17, no.7: 6-104.

Scott, G. (2006). The Free Flow of (Digital) Information: The Apple Computer Case. Justice System Journal, vol. 27, no3: 11-97.

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