Assignment_2 Individual

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Sheridan College *

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4200D

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Accounting

Date

Apr 3, 2024

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docx

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Uploaded by AgentSwan4092

There are 2 parts to this individual assignment. Part 1 – read the Maple Leaf Airport (MLA) case provided. Answer the 5 requireds using the information and appendices provided. Answer in a new word document (use the following naming convention LastName_FirstName_Assignment2_Part1). Your response for Part 1 should be no more than 2,500 words. Part 2 – read the scenario provided. Address the specific requireds. Answer in a second new word document (using the following naming convention LastName_FirstName_Assignment2_Part2). Your response for Part 2 should be no more than 2,500 words.

Part 1: (60%) Maple Leaf Airport (MLA) Case You, CPA, are an internal auditor with Maple Leaf Airport (MLA). MLA, located in Maple Leaf City, has undergone significant expansion during fiscal 2023, including the construction of a new terminal building to allow it to start servicing international routes. Given it operates on land leased from the Canadian government, MLA is subject to regulation related to both environmental issues and which airlines it is permitted to do business with. Details on the Land Use Rules are provided in Appendix I. It is February 13, 2024, and you are beginning to prepare for the December 31, 2023, annual external audit of the financial statements in accordance with International Financial Reporting Standards. “ We need to address the key accounting issues before the audit firm arrives,” the director of internal audit, Carol LeBlanc, explains. “Therefore, I would like you to prepare a memo on the treatment of the accounting matters I have identified in Appendix II . Required 1: There are three accounting issues which are to be discussed in the case. You should use the following approach to discussing an accounting issue: Issue = should include the accounting treatment the company is currently following and what you will be analyzing. GAAP = identify the key GAAP criteria which will be used to support your discussion. Analysis = your interpretation of the GAAP criteria and using case facts to analyze. Recommendation = your recommended accounting treatment – what they should be doing, as well as the impact on user objectives if any. “The chief financial officer (CFO), Zach Mostar, also mentioned that during his review of earnings, he became concerned with the revenue figures from our parking lot,” Carol continues. “He did not notice a decrease in car traffic, but revenue has significantly declined. Upon further investigation, he discovered that fraud had occurred. I have provided the background on our parking revenue process and an analysis of the current-year revenue figures in Appendix III. Please provide the CFO with some insight into what may have happened and how we can improve our controls over parking revenue to prevent something similar from happening in the future . Please also explain what analytical procedures MLA staff can perform as detective controls to help them identify, on a more timely basis, any anomalies in parking revenue . Required 2: Address the control weaknesses (discuss three) in the parking revenue process. Use the WIR framework (weakness = clearly explain the issue/control design flaw using case facts; implication = the financial or other impact/why the company should care; and recommendation = what control should be implemented to prevent an issue in the future/be specific. Required 3: Discuss three analytical procedures which could be performed to address the objective of the user (to perform as detective controls to help them identify any anomalies in parking revenue. “ Further, our external auditors have asked for our assistance in completing audit procedures over additions to capital assets related to our new international terminal, and procedures over our landing fee revenue. Please design procedures over the additions to capital assets, keeping in mind the relevant risks . For landing fee revenue, given the high volume of flights on an annual basis, an analytical procedure is likely the most appropriate. Please perform that analysis . Required 4:

provide the audit procedures (4 good ones) for the new terminal building. When developing substantive procedures use the RAP framework: Risk – what the risk of an overstatement or understatement is and why. Assertion – the key assertion(s). Procedure: a complete procedure which includes what the starting point is, what evidence we need, how we will review it, and how it connects back to the GL. Required 5: Prepare the substantive analytics (2 good ones) over the landing fee revenue. Show your calculations, support your assumptions/inputs, and interpret your results.

APPENDIX I LAND USE RULES The Canadian government requires Maple Leaf Airport (MLA) to be in compliance with the following regulatory rules as a condition for using the land leased for airport operations. MLA complied with all of these regulations in 2023. 1. Environmental Impacts The impact of carbon dioxide emissions on the Maple Leaf City region from departing and arriving flights must be limited to 1,000 metric tonnes per annum. Each additional metric tonne is subject to a $10,000 fine. When a jet airplane lands and then takes off, it generates a total of 100 kilograms of carbon dioxide impact, on average, on the local surrounding area (1,000 kilograms equals 1 metric tonne). 2. Canadian Airline Facilitation M L A must not engage a foreign airline to service more than 5% of the volume of a given route, calculated based on number of passengers travelling the route. For example, if total passenger demand for a route from Maple Leaf City to Singapore is 100,000 passengers per year, foreign-based airlines may not service more than 5,000 passengers. Each percentage in excess of 5% is subject to a $15,000 fine per route. 3. Noise Pollution Given proximity to residential communities, MLA must cease airport operations at 11:00 p.m. local time on a daily basis and refrain from beginning airport operations until the following morning at 6:00 a.m. Each flight that takes off or lands during the hours of limitation will be subject to a $2,500 fine. Non-compliance with these rules will result in fines to the airport, as specified above. M L A is expected to commit to the highest standards of ethical business conduct and service to its stakeholders, including customers, employees, tenants, suppliers, neighbours, and the city.

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