...Audit Lakeside Case October 13, 2015 1. An engagement letter is an essential aspect in establishing an understanding between the client and the audit firm. This documentation is required in order to identify the objective and scope of the audit, outline the specific responsibilities of management and the audit firm, identify inherent limitation of the audit, ascertain the applicable financial reporting framework, and the expected forms Engagement letters are necessary in settling disputes between auditor and management. When management signs the written engagement letter, they are entered into an executor contract with the auditor. In the engagement letter presented by Abernethy and Chapman, the audit firm clearly outlined the following responsibilities for Lakeside management: 1) The financial Statements 2) Establish and Maintain internal controls over financial reports 3) Identify and ensure compliance with laws and regulations applicable to its activities 4) Make all financial records and related information available to auditors 5) At the end of the engagement, providing a representation letter Abernethy and Chapman outlined the following responsibilities for the auditor: 1) Audit financial statements for purpose of establishing an opinion on the financial position, results of operations, and cash flows in compliance with GAAP. 2) Obtain reasonable, not absolute, assurance that financial statements are free of material misstatements, in...
Words: 2603 - Pages: 11
...Ethics and Compliance Paper Ethics and compliance with laws demonstrates the integrity of corporations that strive to advocate these. Ethics serves as the backbone for a company to sustain a secure financial environment. To do so companies have to comply and make it a priority to incorporate these laws into every day practices. This paper will evaluate the role that ethics and compliance plays in Wal-Mart’s financial environment, explain Wal-Mart’s procedures to follow ethical behavior. It will also identify the processes that uphold SEC regulations as well as evaluate and calculate the company’s financial performance for the last two years discussing how that describes Wal-Mart’s financial health. Wal-Mart’s Ethics and Compliance in its Financial Environment Ethics and compliance plays an essential role in ensuring Wal-Mart’s continued success. Wal-Mart delineates expectations clearly and in an open manner on its company website. All employees adhere to the Wal-Mart’s statement of ethics. According to Wal-Mart Stores (2008), “All financial books, records, and accounts must accurately reflect financial transactions and events. They must conform to generally accepted accounting principles, and to Wal-Mart’s system of internal controls. No Wal-Mart document or record may be falsified for any reason” (Financial Integrity, para. 1). By outlining responsibilities and going above what the law requires in terms of financial disclosures and records, Wal-Mart distinguishes...
Words: 1631 - Pages: 7
...Competition Bikes, Inc. Competition Bikes, Inc. makes bicycles for professional and other highly accomplished riders who compete in bike races, biathlons, and triathlons. Sixty percent of all race winners have been victorious using a Competition Bikes, Inc. bicycle when at least ten percent of the entrants were also using a Competition Bikes, Inc. bicycle. This extraordinary success rate consistently is a topic of conversation among racers and this word of mouth advertising has been effective in promoting sales. The company also uses these statistics to promote sales, although its advertising efforts have been quite limited. The Main Competitor Two Wheel Racing, Inc. is the only other manufacturer that offers a competitive product in this market space. Their product weighs only a few ounces more than the bikes made by Competition Bikes, Inc. but Two Wheel Racing builds a chain driven product. Two Wheel Racing, Inc. is also a publicly traded company. Their financial ratios are provided for comparison and analysis. Ownership History: Larry Ferguson formed the company in 2001 in his garage. An avid racer, Larry often heard comments from other riders about how heavy and unreliable their bikes were. Larry identified and sought to remedy this market niche by creating a specialized product that would satisfy the needs of racers. His new company also proved to be a vehicle for financial success. Early success prompted Larry to take the company public after three years in order...
Words: 6118 - Pages: 25
...factors. The problem noted and or failure to implement a recommended solution could have the following impact: High Medium Low Potential significant life/ safety threat. Remote life or safety threat. No life or safety threat. Potential exposure of large volume PII or other confidential data. Potential exposure of any amount of confidential data. No confidential data. Impact on financial statements is material (PWC SAS-112 financial risk is rated high). Reportable financial statement impact. (PWC or SAS 112 medium risk ranking). No financial statement impact. (PWC or SAS 112 low risk ranking). Potential campus wide impact: 1. Major administrative computing system internal control weakness. 2. Potential for mission critical process or system failure or breach. (e.g.: inability to timely register students or pay employees). Departmental or unit only impact. Small subsection of people or transactions affected. Large dollar amounts or highly liquid assets at risk (cash). Medium dollar amount at risk or assets not liquid or convertible to cash. Low dollar amount at risk. Lack of major control step. Significant control weakness creates potential for fraud. Other compensating controls exist. Several other compensating controls. This is a minor control feature. Public trust loss if bad effect occurs. Some impact on public trust or Regental concern. Unlikely public interest. Potential for wide spread violation of law, grant or contract or actual violation has occurred. Potential...
Words: 343 - Pages: 2
...ASIAN STAR Perfection from within Annual report: 2011-2012 Priyesh Dani MMS B Roll no - 105 Asian Star Company Limited Asian Star Company Limited, established in 1971, is one of the world’s leading diamantaires. Its business comprises of diamond manufacturing, jewellery manufacturing and retailing. Having marketing arms spread across three continents – Asia, Europe and America – the company is strongly positioned to serve its valued dientele around the globe. Vision To be a world-class diamantaire enjoying sustainable growth, to maximize the potential of our core competencies and add long-term value to diamond pipeline. Mission We will live each day our passion for innovation and excellence, to create highly desirable diamonds and experiences that surpass our customers’ expectations. Core Values The source of our work ethos and sense of commitment arises from the belief in our core values:- * Integrity * Partnership * Excellence * Responsibility * Unity Company Highlights and Achievements * Awarded 1st for Highest Export – GJEPC in 1992 * National...
Words: 13839 - Pages: 56
...the three previous audits resulted in unqualified opinions. Toys City's year end is 31 December, and Goodman & Goodman has agreed to provide the audit report on 1 March, 2010, ten days before the annual board of directors meeting. Mr. Lam, the manager from Goodman & Goodman in charge of the Toys City engagement, recalls that last year there was a 25 percent budget overrun. He attributes one-third of the overrun to unforeseen circumstances and the remaining two-thirds to poor planning. He estimates that poor planning resulted in approximately 130 hours and $3,400 in audit fees that were not billed to Toys City. In an effort to avoid another costly overrun, Mr. Lam wisely decided to devote more time to audit planning. By talking to various people, Mr. Lam learns that a project management technique known as Critical Path Method (CPM) could assist an auditor in sequencing all audit detail work (including work requested from client personnel), efficiently allocating personnel resources, highlighting potential audit bottlenecks, estimating completion time, and providing a framework for relevant feedback and control as the audit progresses. Thus, he decides to spend an additional 17 hours planning this year's audit, including computer setup and analysis time, using CPM. Audit planning During the slow month of August 2009, Mr. Lam and Ms. Ip, the senior-in-charge of the Toys City engagement, analyzed the audit plan for Toys City. Basically the audit work could be divided...
Words: 2408 - Pages: 10
...The Business Enterprise 508 Lisa Falls December 11, 2011 Microsoft Corporation and Apple Computers, Inc. Annual Report Comparison as we all know that both of these companies have become public figures names. Both companies have many divisions, and both manage extensive assets and liabilities. In searching various internet articles both reported large amounts of income, and the matter of accounting checks and balances becomes more complicated than many smaller companies. Apple, Inc. is Microsoft’s biggest competitor in designing and developing computer software. Apple was started in April of 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. In January of 1977, Apple was incorporated but without Wayne. On September 7, 1984, Apple had its first initial public stock offering. It was also during this year that the Macintosh computer was introduced. 1985 brought some turmoil with the new CEO John Sculley and Steve Jobs, and Jobs was removed from his position with Apple. After many tumultuous years and mismanagement, Apple brought back Jobs as a consultant in 1996. In July 1997, after the CEO was let go, Jobs resumed his position as CEO. In May 2001, Apple opened its first retail store and later that year introduced the IPOD, which became a huge success for Apple, along with the release of the iMac computer. By 2006, Apple was using Intel chips solely for its computers. On January 9, 2007, Apple released the iPhone and Apple TV, which made Apple’s stock soar...
Words: 1931 - Pages: 8
... | Financial Terms and Roles Finance is concerned with how individuals, such as managers, lenders, businesses, firms, investors, and borrowers allocate money over a specified period. This paper lists the definitions and roles of financial and accounting terms provided in the course design. The terminology that follows explains and interprets the concepts and elements relevant to the first week’s objectives and topics in Finance 370. Emphasis is placed on types of securities, markets, finance, equity, liability, ratios, and assets. Finance is the study of how people and businesses evaluate investments and raise capital to fund them. The key role of finance is the management of cash flow in deciding on investments, how to fund them, how to allocate money for day-to-day operations over time, and the interpretation of financial concepts, which is the central focus of finance. Efficient Market is a market price unbiased of the investments true mean value. The fact that the mean true value will deviate from the true mean randomly infers that there is an equal likelihood that prices may be over or under valued at different points in time. Because price is associated with the principle that market price reflects information, investors could drop, trade, or sell shares stocks, for example with...
Words: 3334 - Pages: 14
...Noncurrent Assets Ernest Respi ACC/400 June 25, 2012 Lane Groff Current and Noncurrent Assets Accounting is a way a business records transactions, keeps financial records, performs audits, and reports information. Accounting shows profits and losses for a business at any given time, it shows assets and liabilities. This is an important part of every business; a business must know exactly where all its assets and liabilities are in order to grow. Accounting provides the methods to track assets and define if these assets or gains or losses, current and noncurrent assets is one way to category gains and losses. Current assets is “an asset such as receivables, inventory, work in process, or cash, that is constantly flowing in and out of an organization in the normal course of its business, as cash is converted into goods and then back into cash. In accounting, any asset expected to last or be in use for less than one year is considered a current asset” (Business dictionary). Current assets is the day to day business of a company, this assets is what a company uses to support the day to day function of the company. There are five main types of current assets cash or its equivalents, investments, account receivables, inventory and pre paid expenses. Current assets are found in financial records such as a balances sheet, this give stakeholder a way to view and track the company’s growth. Noncurrent assets is “an asset that is not expected to be turned into cash within one year...
Words: 862 - Pages: 4
...could be used by the rivals. The author presents the number of tools and activities that should be regarded for strategy sustainability: unique activities, trade-offs and fit. The success of company strategy depends on entire system of activities. To my point of view, the best way to demonstrate understanding of red materials and my own vision on article presented concepts is to demonstrate good examples of perfect implementation of strategy. I tried to find some examples of strategies that become determined in companies success. The strategy highest priority is to be different from others, to have the set of unique activities to attract the customer. For example, consider a Metro Cash & Carry - a leading international player in self-service wholesale trade. A broad product range, quality, freshness and tailored services are the compelling benefits of the company. METRO Cash & Carry offers commercial customers in 29 countries around the world. The sales line offers...
Words: 1022 - Pages: 5
...investors and employees to analyze assets versus liabilities. This will allow them the ability to operate efficiently and determine how quickly the company can pay off its debts. To provide a clear picture on how fast a company will be able to come up with cash, a person needs to understand the value of each asset, how the asset is classified, and the order in which they are listed. On the other hand, understanding the impact of each liability and previous to current trending of total liabilities will show if the company is able to control their liabilities or if they are accumulating additional obligations to repay overtime. Below you will see an analysis of the Coca-Cola Company’s assets versus liabilities and it will answer the questions of if and when they have the ability to repay debts. In a balance sheet, a company lists its assets and specifies which assets it is expecting to covert to cash within the next operating cycle. These assets are named “current assets” and should be listed in the order in which they typically can expect to receive cash for them. Coca-Cola’s current assets are listed in the following order in their balance sheet: cash and cash equivalents, short-term investments, marketable securities, trade accounts receivable, inventories, prepaid expenses, and assets held for sale. The cash and cash equivalents asset is on top of Coca-Cola’s current assets list since it has been converted to cash already or is considered the same as cash with very low risk. Short-term...
Words: 1041 - Pages: 5
...financial indicators. Standard industry financial indicators are used to measure against known success rates and will indicate the stability of a company in its current operations. Using the history and trend of these same indicators will predict the future financial performance of the company. These key indicators are not very different than a large scale of the indicators we use in our own personal life to budget our families and ensure our future ability to pay our bills while growing our personal wealth through asset ownership. The basis of the successful budget or operation is a guaranteed and continued positive income, minimization of debts, and gaining both liquid and non-liquid assets to our ownership. To measure and predict these indicators, we will need to analyze the industry standard tools that are accepted as financially credible information regarding the company. These tools are in the form of income statements, balance sheets, cash flow statements, asset definitions, and overall profit statements that capture the net result of the operations and trend these results into a history of performance and potential to perform in the future. A. To evaluate Competition Bikes, we will look at four different ways to thoroughly evaluate the current and future potential of the operation and company. Only then can we be secure in knowing that our analysis is accurate and that any recommendation we make will be the right ones for the company to be successful. Once we have determined...
Words: 11660 - Pages: 47
...LJB Company Audit Report regarding Internal Control Activity Requirement Evaluation for Initial Public Offering and Indelible Ink Printer Procurement Recommendation Author: Phillip Stevens, Buck Stops Here Accounting Associates Securities Exchange Commission Internal Control Requirement Explanation As part of the Initial Public Offering application process with the Securities and Exchange Commission, companies are required to document and validate their internal control activities including policies and procedures. The internal controls must ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Safeguarding assets against theft and unauthorized use, acquisition, or disposal is also part of internal control “best practices”. The Securities Exchange Commission guidelines for internal control activity validation include one or more of the principles: • Segregation of duties requires that different individuals be assigned responsibility for different elements of related activities, particularly those involving authorization, custody, or recordkeeping. For instance, the same person who is responsible for an asset's recordkeeping should not be responsible for physical control of that asset. • Proper authorization of transactions and activities helps ensure that all company activities adhere to established guide lines unless responsible managers authorize another course of action. Proper authorization...
Words: 851 - Pages: 4
...efficient operations, and compliance with applicable laws and regulations. Safeguarding assets against theft and unauthorized use, acquisition, or disposal is also part of internal control “best practices”. The Securities Exchange Commission guidelines for internal control activity validation include one or more of the principles: * Segregation of duties requires that different individuals be assigned responsibility for different elements of related activities, particularly those involving authorization, custody, or recordkeeping. For instance, the same person who is responsible for an asset's recordkeeping should not be responsible for physical control of that asset. * Proper authorization of transactions and activities helps ensure that all company activities adhere to established guide lines unless responsible managers authorize another course of action. Proper authorization also extends to multiple approvers for large capital expenditures and hiring personnel. * Adequate documentation and records provide evidence that financial statements are accurate. Controls designed to ensure adequate recordkeeping include the creation of invoices and other documents that are easy to use and sufficiently informative; the use of pre-numbered, consecutive documents; and the timely preparation of documents. * Physical control over assets and records helps protect the company's assets. These control activities may include electronic or mechanical controls (such as a safe...
Words: 823 - Pages: 4
...Week 8 – Assignment Case Study – 9.1 – Wally’s Billboard & Sign Supply 1. The audit of cash is considered an important part of an audit due to the below reasons: * Almost all business transactions will be ultimately settled through the cash accounts * Cash can be either and asset or a liability * The audit of cash accounts assists in the verification of other asset and liability accounts as well as revenue and expenses * Cash is the highly liquid asset in a company and it is an area of high inherent risk since there is a relatively high risk of misappropriation. * Investors rely on the accuracy of cash in evaluating the company’s financial well being The audit steps for cash are a routine part of an audit, therefore this part is usually assigned to new staff members or interns. However, professional skepticism should be present when reviewing cash or any other part of an audit, whether routine or not. (Hinton, Lecture Notes) 2. It is very important when an auditor develops an audit program to include thorough procedures for auditing cash balances, as it has a direct effect on an organization's profits. The auditor must perform audit procedures of the internal controls of the company to detect any shortcomings. In addition, the auditor will perform substantive tests of details, tests to detect lapping, and analytical procedures in order to verify that there is no material misstatement and to provide evidence to support the assertion...
Words: 2103 - Pages: 9
