Technology Parts Inc. is a wholesaler of computer hardware components. The company purchases inventory items in bulk directly from parts manufacturers and sells the parts to computer and other technology equipment manufacturers that use them as components in their products. Technology Parts Inc. grants suppliers access to its inventory management system through its website. Suppliers have real time access to information about the parts inventory, including information about quantities held, storage locations, and forecast of product demand. In addition, customers have access through the website to information containing product descriptions, price, delivery estimates, availability status, and quality and reliability ratings. Customers can also access information to assess the compatibility of selected parts with other components used in their production processes.
REQUIRED
a. Identify business objectives that Technology Parts’ management may be able to achieve by providing this information online to key suppliers and customers.
b. How might the availability of the information to suppliers and customers increase Technology Parts’ business risk?
c. What processes should Technology Parts’ management implement to minimize business risks?
d. How might the availability of the information increase the risk of material misstatements in the financial statements?
e. How are the components of the audit risk model affected by the internet access?