BUS101 Business

For many companies, especially public ones, there are a variety of sources auditors can draw upon to make their risk assessments. Auditors will often create a Google Alert to notify them when their client is mentioned in the press.

For this assignment, find a current news article (no more than 1 year old) about a company. Imagine that you are on the current year’s audit for this company. Your presentation should answer the question: how would the information in this article affect how I conduct the audit of this company. Your presentation should:

• Summarize the article, identifying the key business issues.
• Relate the key business issues to the audit – why and in what ways would they affect the conduct of the audit?  The more specific you can be and the more you can bring in concepts we have discussed in class, the better.

Bloomberg article on Groupon

The article published by Bloomberg on October 28^th 2016 reveals that “Groupon’s once Bright Star Burns Out”. The article reveals that Groupon is purchasing Living Social Inc in order to raise their market share even though the acquisition is not a big one for Groupon to disclose the price in the market. Groupon has once been flying high when the price of one public share costs $ 28 but now their price of one share has fallen to $4 (McArdle et al., 2017). The net income of the firm has decreased to 0 percent and therefore the organization announces a retrenchment during the same time when they acquired Living social Inc.

The downfall of Groupon has mainly been due to two key business issues namely advertising and price discrimination. The paper reveals that the marketing strategy of the firm was faulty, which is one of the significant business issue as they provided benefits to people who value their money more than their time. In order to get a coupon people bought more and even collected various newspapers in order to get discount. The price discrimination strategy lowered their sales and thereby even reduced their cash flow. The reduction in the share price and the net income had an income on the evaluation on the part of the auditors as they did not find a clue to construct a strategy that would increase their net income and would bring the firm out of this situation (Lee 2016). The audit of the firm even had an impact as the auditors did not have a definite plan or structure to convey the audit as the prices and the cash flow varied from time to time and therefore, the auditors used variable polices and framework and therefore the audit process looked faulty. The implementation of these issues was a setback for the firm as it had an impact on the business conduct. The availability of these issues within the business structure of Groupon led to the fall in their net profit and an decrease in the cash flow, which in turn created problems for the auditors and thereby had an impact on the brand image of the firm and the their market share.

References

Lee, I. (2016). Using Groupon for health and wellness businesses. Business Horizons, 59(4), 369-377.

McArdle, M., Lake, E., Winkler, M., McArdle, M., & Wilkinson, F. (2017). Groupon's Once-Bright Star Burns Out. Bloomberg View. Retrieved 1 April 2017, from https://www.bloomberg.com/view/articles/2016-10-28/groupon-burns-out-with-deal-for-livingsocial