Briefly summarize the key events surrounding the case
The key events surrounding the case of Just for FEET Inc. include the beginning of the career by Harold Ruttenberg when an entrepreneur from South Africa had to move into the United States and start his business over again after making an attempt in his native country. As such, his business became effective leading to the increased number of stores featuring the most attractive features that can be found in shops of sportswear and footwear.
In this respect, it is necessary to emphasize that the rise of professional basketball involvement became one of the key events, especially when such starts of professional sports as Michael Jordan and Shaquille O’Neal were starring in Just for FEET stores making them even more attractive for customers. Additionally, the development of the shopping malls and opportunities open for smaller entrepreneurs to rent some areas in those malls became a real bargain for Harold Ruttenberg as it enabled him to rent areas without thinking about building a large store. As such, the company could run many stores without being forced to let other companies in while being unable to run the store (regarding the areas) by itself.
The features of the stores can be considered another set of key events surrounding the company because it had a snack bar demonstrating the development of the fast food industry and making it clear that most companies wanted to extend their brands at least by offering additional services and features. In this respect, the play grounds in Just for FEET stores made it possible for customers to try the footwear in action. In addition, the rise of major footwear manufacturers who focused on sportswear was a profitable source for the stores because they could offer a wide range of different types of products starting with the cheapest and most affordable to the luxury brands.
Briefly summarize the key auditing topic (example, ethical conduct, independence, legal liabilities to foreseeable users, etc; relevant issues to the Auditing
The key auditing topic related to the Just for FEET Inc. athletic footwear and sportswear stores is the legal liabilities because the company’s three executive managers were accused of auditing frauds. The thing is that the auditing is the activity which helps the company to make the financial statement enabling the stakeholders and shareholders to make adequate decisions in accordance with the information received. As a rule, the information makes it clear whether the company’s performance is positive or negative for future investments and agreements. However, the company’s fraud in auditing made the executives to conceal the underperformance of the company for a few years making it a risky business for stakeholders.
At the same time, unethical conduct can be considered another key auditing topic of the case because the executives could have acted in accordance with the CEO’s orders or against his will. In this respect, unethical behavior of executives made it impossible for stakeholders to make corresponding decisions and save at least some capital or make the failure less painful. The auditing should be done by an independent company excluding any risk of fraud and guaranteeing the safety of capital for shareholders.