Peet’s Coffee
It has been requested that we audit for Peet’s Coffee and we have accepted this audit engagement. We will outline in this document the necessary steps to plan the audit we are going to perform for Peet’s Coffee.
First, we must get an understanding of the client’s business. Peet’s Coffee is a publically traded company that was founded in 1966. The first Peet’s Coffee shop was located in Berkley, California and was ran by the owner and founder, Alfred Peet. Peet’s Coffee roasts and sells specialty coffee and various bakery and coffee shop items. Peet’s coffee can be found in retail and specialty stores and their coffee is also available to be delivered to homes, offices, restaurants, and …show more content…
In recent years this amount has changed but has not changed much. The earnings per share for the two previous years were $1.48 and $1.34. This shows that the earnings remain consistent. When compared to Starbucks Coffee’s earning per share of $1.83, they are very close in amount. They both offer the same types of coffee services. Green Mountain Roasters has a much higher earing per share of $2.28. Green Mountain Roasters recently acquired Keurig which gives them an advantage in the single serve coffee brewing market. According to the article Single-serve Coffee Revolution Brews Industry Change by Angel Gonzalez, the single serve coffee use has grown rapidly since it’s introduction in 1998 and now makes up a significant percent of coffee consumption (2012). Peet’s Coffee must to continue to expand into the single-serve market to appeal to a new coffee …show more content…
The Audit Risk Model serves as a methodology to identify an audit strategy that needs to be followed. Audit risk is the risk that an auditor may issue an unqualified report due to the auditor’s failure to detect material misstatement or fraud. Peet’s Coffee has an extensive system of internal control. They have internal control procedures that address the five control activities. They involve separation of duties, proper authorization, adequate documents and records, physical control over assets and records, and independent checks on performance. For this reason, the inherent risk for Peet’s Coffee is low and control risk is low which make the overall risk of misstatement lower. This results in a high detection risk meaning there is a higher chance that the auditor will not find material misstatements when they are actually