Here is an example, I just don't see the format of this memo other than regurgitating information
PROMPT
“The AICPA has recently stated that a CPA must have a “strong understanding of the business environment and processes.” In order to accomplish this objective, CPAs must understand the context in which an entity operates, including economic business cycles. You have been assigned the task of preparing a memo for your audit team explaining how the four basic phases of a business cycle impact a business’s environment and processes.”
NINJA RESPONSE
“A business cycle is a pattern of expansions and contractions in economic activity. Economic activity can be measured with a variety of leading and lagging indicators, including gross domestic product (GDP), jobs, production, and sales. Understanding the phases of a business cycle can help to explain and predict the long-term trend of the economy, and the resulting impact upon a client’s business. Auditors can identify and focus on areas where there is an increased risk of management override or circumvention of internal controls due to economic pressures on the business.
Cyclical businesses and industries (e.g., durable goods) generally perform better than average during expansions and worse than average during recessions. Counter-cyclical or defensive businesses and industries (e.g., pharmaceuticals, insurance carriers) do well in economic downturns as demand for their products continues regardless of the state of the economy.
The business cycle is characterized by four phases, and is measured as the period of time from the peak of one cycle through the four phases to the peak of the next cycle. The four phases of a business cycle are expansion/recovery, peak, contraction/recession, and trough.
In expansion/recovery, businesses are growing, new jobs are being created, wages are rising, and unemployment is decreasing. This can increase demand for products and services which exceed the supply, applying upward pressure on prices and driving inflation. In the extreme, overtime can become excessive and the utilization rate for plant and equipment can exceed normal levels. Firms may expand too rapidly, creating a risk that established internal controls no longer function effectively. Management may not notice or respond in a timely manner as they are overwhelmed by the production demands on the business itself.
The peak is the highest point of output during the cycle. The economy is operating above the long-term growth trend of real GDP. The economy is no longer growing, sales are declining, unemployment is rising, and economic output begins to fall.
In contraction/recession, the economy begins to shrink. Employment levels contract, consumer demand falls, and inventory levels build, depressing employee morale and price levels. It is often more difficult for management to meet their performance goals, increasing the risk that management may override or circumvent internal controls. Internal controls may be compromised as entities try to cut costs, resulting in unintentional errors or fraud. Disgruntled employees may find it easier to rationalize theft.
The trough is the lowest point of output during the cycle, with high unemployment rates, a decline in annual income, and overproduction. This is the time at which the real GDP stops declining and starts expanding.” /END
*I see the intro and then the body goes into more detail, but why is there no conclusion? It just ends…?
Same with some of the other examples, I don't really see a method to the madness other than hitting a few of the buzzwords and explaining what they mean. Is that all it takes?