Research in Motion Audit Planning Essay

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Company and Management Background:
Research in Motion (RIM) was founded in 1984 in Waterloo, Ontario. Its founders were then university students Mike Lazaridis and Douglas Fregin. Since its inception in 1984, the company’s product offerings have expanded from the designing, manufacturing and marketing of wireless communication devices to the provision of e-mail, phone, short message service, internet and intra-net application solutions. The company was a pioneer in smartphone devices and until the introduction of Apple iPhone and Android based devices has been an industry leader. In recent years the company has struggled to keep up with the recent trends in the industry and as a result of sagging sales and dipping share prices the CEOs (Lazaridis and Jim Balsillie who later joined RIM as CO-CEO) resigned and were replaced by another RIM veteran Thorstein Heins who along with a comprehensive austerity plan introduced a new business model and long term strategic plan for the company.
The shareholders of RIM are represented by nine additional independent directors who are responsible for oversight and governance. In addition, RIM has an audit and risk management committee that provides assistance to the board of directors with regards to legal and fiduciary obligation in areas such as accounting auditing, financial reporting, and internal controls As well, a compensation, nomination and governance committee provides assistance to the board of directors in areas such as compensation of senior management and the selection and appointment of new directors. Company’s major shareholdings are by institutional investors and mutual funds among them Fairfax Financial Holdings and Primecap Management holds around 10% and 5% of the stocks respectively. Lazaridis still is the largest individual shareholder (around 5.1%) while Balsillie who left RIM in March 2012 liquidated most of his substantial holdings in RIM.

Business and Industry Analysis: Although Research in Motion was one of the pioneers in the wireless data interchange and smart phone device industry, their flagship product the Blackberry handheld phone and its smartphone based OS was hard hit by competitor like Apple’s iPhone touchscreen devices and Google’s Android base mobile OS platform. The company tried to introduce several new product-lines and also acquired an Operating System Development Company (QNX) with a view to revamp their blackberry based OS to compete with its competitors, the company saw its market share largely depleting during most part of the last decade against the wave of innovation in the mobile application delivery models, introduction of touchscreen based smart phones by competitors and their wide adoption by consumers and an array of mobile application offering. While at one point it was estimated that 85% percent US handheld devices were powered by Blackberries, RIM saw its global market share reduced from 20% to a mere 5%. The company’s stock saw a dip from a high of 90$ per share to around 6$ in 2011. Analysts and market commentators attributed such a lagging performance to the strategic vision (or lack thereof) of the previous Co-CEOs as it was widely held that these two Senior Managers read the market trend inaccurately, held too long against the adoption of touchscreen and other related offerings in blackberry models and were unable to motivate innovation within the company. In 2012 the shareholders forced both the CEOs out of office. While Balsillie left the company in March 2012 and liquidated most of his shareholdings in RIM Lazaridis stayed as the vice Chairman of the company and spearheaded the development of the much anticipated touchscreen based BB10 platform that somehow brought Blackberries back into the limelight. In 2013 after the introduction of the BB10 touchscreen phone and taking office of the new CEO , the company saw its stock prices resuscitated, although analysts attribute much of the stock price rise to the cost
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