Essay Sample on Audit Risk Analysis Project on Nike

Nike Inc. is the leading manufacturer and seller of sports shoes, equipment, and apparel globally. The Nike Company was formally known as the Blue Ribbon Sports. It was founded in the year 1964 by Bill Bowerman and Phil Knight. Bill Bowerman was looking for ways to improve the performance of his students and attempted enhancing their shoes in his free time. Phil Knight was known to be the middle distance running who hailed from Portland and trained under the track and Bill Bowerman who was his field coach. Bowerman tried many combinations, and they did not contribute to his success. Meantime his student Knight moved to Stanford University to complete his MBA in Finance. While at the university, he wrote an assignment and suggested the manufacturing of shoes in Japan that could assist retailers to compete with the Germany brands that were well established at the time. His suggestion was not considered, and he decided to import the shoes from Japan by himself and sell them locally. He tried to sell his first stock of shoes to Bowerman, his previous coach but he got interested in joining him, and they decide to partner. Despite that, the business grew slowly, but by 1965 the sales had reached PS20000 (Carbasho, T. 2010).

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The Nike Company has shown constant growth since its foundation. The resources that the company has including its current management appropriately design. The organizational structure of the company shows their limits and abilities of the company in its operation - the organizational structure that is composed of proper system design and good interconnection among the management, employees and other divisions of the business. For these reasons, therefore, I recommend that Nike. Inc. is accepted as an audit client.

Nike Company is so far the leading company in supplying the sporting facilities. Statistics show that Nike patronizes 48 % of the athletics shoes used in the USA and 96% of the basketball shoes. Nike Company also has 700 stores in the world, and 45 countries globally have Nike office.

The history reveals that the company was started with only 1200 dollars. It was initially named blue ribbon sports before later rebranded to be called Nike inc in 1971. The success of the company is associated with the good marketing strategy employed by the company which is not limited to proper marketing research thus prober logo for the company. The company focuses on the idea of customer's satisfaction and the emotional feeling about the product. This means that Nike Company focuses on the consumer product satisfaction and the final benefits accrued from using the product which for this case is the benefits of doing exercise. Nike company also embraced new technologies in their products, for instance, they have developed an automated shoe that outplaces when the heel is put on the shoe, Nike has also constantly done research and try to make the shoe lighter and lighter to enhance its usefulness to the user (Epstein, M. J., & Rejc, A. 2014). They have also developed a shoe called Nike air Vapormax that attempt to remove foam and instead replaced with bags of air. In the year 2006, they also developed a shoe that allows the tracking of the runner regarding the distance and the pace of the runner.

Nike Company provides a large number of shoe verities for different games, e.g., basketball, combats sport, volleyball among others thus attracting a bigger market. The fact that the company supply a variety of option to the customers, it has made the company to control a large market share than any other company. The company also focuses on producing quality products for the customers that will help them to better their performance and to make their life better and better and also to improve the health status of the customers. With all these strategies employed by Nike Company, it has made it remain outstanding in the market and thus supporting the fact that the firm is worth accepting as an audit client.

The secret of the success of the Nike Company is that the competition that befalls on their way provide a good opportunity for them to be more creative. They tend to respond more strongly than before. Nike Company ensures that in everything they remain ahead of the rest regarding technology and quality products, for instance, they were the first company to launch their products online in 1999 followed by footlocker in 2000 and then the followed by rest (In Rahim, M. M., & In Idowu, S. O. 2015).

Nike Company has a total of 73,100 employees and 14 directors. The board members are appointed by the nominating and cooperate governance committee after evaluating the suitability of the candidate. The qualification for appointment ranges from the educational background of the candidate, intelligence, character, and experience. The first five members of the board are:

Mark G. parker- He is the chairman, president, and the chief executive officer. He joined Nike Company as the first footwear designer in 1979, and since then he has played an active role in designing. He has also greatly contributed to expanding the company's portfolio.

John Washington Rogers- Director and work with Nike Company full time.

Philip Hampson Knight - He is the Chairman Emeritus and works with NIKE company. He has been the director since 1998.He is one of the main founders of the company; he has steered the company from the time of handshake until now it is the top-notch company in supplying a variety of shoes.

Traviss A, Knight - Director and work with Nike Company.

John R Thomson - Director and work with Laika LLC, Nike in apogee enterprises

With a total of 14 board members, 7 work with the Nike inc company full time and 7 others work in other companies as well as serving as directors of Nike company. This means therefore that 7 out of 14 members of the board will be considered independent under the Security Exchange Commission (SEC) rules. Under the sec rule, it assumes that the members of the board working full time with the audited company are not independent. The reason for this is that the board members working full time with the company are the one directly responsible in case of any mess in the company (Knight, P. H. 2016). Therefore they are most likely to defend the company in case of any irregularity. The board members partly working with the company stand a high chance to be independent since they are not directly responsible for any errors or fraud in the company.

The purpose of the audit committee is to assist the board of directors in making sure that the legal obligations and fiduciary obligations are met especially in matters relating to accounting, presentation of financial reports of the company, auditing of the company accounts and the internal control of the company. The audit committee is a different committee different from the board members, and they are given a responsibility to exercise an independent role in guiding the company on company matters which are not limited to: ensuring the company financial statement comply with the accounting standard rules. They also ensure that the company comply with the regulatory requirements and also to ensure that the internal auditors function as required. The committee also prepares the report that is required by the securities exchange commission (SEC) to be included with the annual company financial reports (Warren, C. S., Reeve, J. M., & Duchac, J. E. 2012).

The audit committee of Nike Company comprises three directors as determined by the board and at least one of the members must be a financial expert. Mr. Parker is the chairman of the committee. Based on the principal of SEC not all the members of Nike Company are independent and therefore there is the likelihood of un-honest oversight of the committee. The chairman of the audit committee work full time thus the possibility of compromising the independent value of the auditors may not work.

In conclusion, Nike Company has played a key role in supplying the sports equipment. The company has to experience gradual growth since Phil Knight, and Bill Bowermen started the company in 1962.

References

Carbasho, T. (2010). Nike. Santa Barbara, Calif: Greenwood.

Epstein, M. J., & Rejc, A. (2014). Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental, and Economic Impacts. San Francisco: Berrett-Koehler Publishers.

In Rahim, M. M., & In Idowu, S. O. (2015). Social audit regulation: Development, challenges, and opportunities.

Knight, P. H. (2016). Shoe dog: A memoir by the creator of Nike.

Warren, C. S., Reeve, J. M., & Duchac, J. E. (2012). Accounting. Mason, OH: South-Western Cengage Learning.