Seminar 3 Case 2.2





Market research and analysis show that the risk of misstatement for Dell is low. While doing research on Dell, Inc. I found that their basic business strategy is to listen to customers and develop solutions that meet the customer’s needs. They have become committed to become an end to end technology solutions provider.

Within Dell, Inc. they offer a wide variety of products and services. These would include desktop PCs, tablets, notebooks and servers. They offer networking solutions, storage solutions and services. Services include:

Dell, Inc. has their global headquarters in Round Rock, Texas. They have operations and conduct business in many countries located in the Americas, Europe, the Middle East, Asia and other geographic regions. To increase their global presence, they continue to focus on markets outside of the U.S., Western Europe, Canada, and Japan. Their continued expansion outside of the U.S. creates additional complexity in coordinating the design, development, procurement, manufacturing, distribution, and support of their increasingly complex product and service offerings.

  1. Support and Deployment Services
  2. Infrastructure, Cloud and Security Services
  3. Applications and Business Process Services

With rapid technology advances in hardware, software, and service offerings and they face ongoing product and price competition in all areas of their business, including from both branded and generic competitors. Some of their competitors would include: Toshiba, Mac and Hewett Packard. They sell their products and services directly to customers and through various other sales distribution channels, such as retailers, third-party solution providers, system integrators, and third-party resellers. Their customers include large global and national corporate businesses, public institutions that include government, education, and healthcare organizations, law enforcement agencies, small and medium-sized businesses, and consumers. They purchase materials, supplies, product components, and products from a large number of vendors. In some cases, where multiple sources of supply are not available, they rely on single-source vendors. In other cases, they may establish a working relationship with a single source or a limited number of sources of supply if they believe it is advantageous to do so due to performance, quality, support, delivery, capacity, or price considerations. They believe that any disruption that may occur because of their dependence on single- or limited-source vendors would not disproportionately disadvantage us relative to their competitors.

Some of their financial data would be:

They use non-GAAP financial measures to supplement the financial information presented on a GAAP basis. They believe that excluding certain items from their GAAP results allows their management to better understand their consolidated financial performance from period to period and in relationship to the operating results of their segments, as management does not believe that the excluded items are reflective of their underlying operating performance. I believe that excluding certain things could cause a little more of a risk of material misstatement.

  1. Sales- $56,940 million
  2. Net income- $2,372 million
  3. Cash flow from operating activities- $3,283 million
    • Total assets- $47,540
    • Number of employees- 111,300
  4. Reference:

    Dell, Inc. (2014). Form 10-K. Dell, Inc. Retrieved July 13, 2014 from

    3. An auditor’s objective for understanding an entity’s business risk would be so they can understand where the company is headed. If they have a lot of risks then they could end up misstating their financial data in order to make themselves look better. They do not have to identify all the business risks because some of them wouldn’t affect the financial statements. They may only affect their strategies of doing things better. When performing an audit an auditor should consider any business risks that are associated with mergers. They also should consider economic conditions and instability in financial markets. If their product is something that people are not able to afford and the economic conditions are poor for the area then they may not be doing well and the auditor needs to pay attention to the net revenue and sales.