BILTRITE PRACTICE CASE
A Computerized Audit Practice Case
Description of the Practice Case
This case has two learning objectives. First, it provides the student an opportunity to apply auditing concepts to a “real-life” audit client. The client, Biltrite
Bicycles, Inc., operates within a unique business climate and internal control environment, and the student must assess inherent risk and control risk accordingly. The case contains modules involving sampling applications, risk assessment, audit documentation, analysis of design of controls, tests of details, audit adjustments, and an audit report upon completion of the 2009 engagement.
Second, the case enables the student to use the computer as an audit-assist device. The student
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Other purchased parts consist of tires, handle grips, pedals, wheels, and spokes. Materials and supplies consist primarily of paint and steel. Biltrite manufactures the frames and handlebars, and assembles and paints the bikes.
The factory, which employs 2,000 workers, was built in 1970, was refurbished and updated five years ago, and it is now quite automated.
Increased automation enabled Biltrite to decrease its factory workers from
3,000 workers ten years ago to 2,000 workers just two years ago. The vice president of production observed that automation enabled Biltrite to significantly increase production-worker productivity. The marketing vice president agrees and predicts revenue and profit growth for at least the next two to three years. In addition to the 2,000 production workers, the company employs 200 salaried administrative employees, including the corporate management staff, warehouse superintendents, and regional sales managers.
In addition, the regional units employ 100 warehouse personnel and 120 salespersons. Hourly employees, consisting of the production workers and warehouse personnel, are paid weekly; salaried employees are paid biweekly.
Salespersons receive a salary plus 5 percent commission, based on gross sales.
Biltrite’s administrative offices are located in another building in the same complex. The company has ten regional distribution locations in various parts of the
The Auditor, an instructional novella written by James K. Loebbecke, tells the story of Jack Butler, a man from the San Francisco Bay area, who goes to college, majors in accounting, and goes to work for a large accounting firm referred to as “The Firm.” The story is loosely based upon the real world experiences of the author, and is written to give students a look into the world of public accounting that goes beyond a textbook. The Auditor not only gives students a chance to follow Jack Butler’s journey up the company ladder at The Firm, but also reiterates the relative importance of conventional lessons learned in school.
risks and determine the likelihood and consequence of that risk occurring during the project. The
Chapter five marks the beginning of Jack’s career at The Firm. It is on this day that he is introduced to the “Bearisms.” Bearisms were a list of unwritten rules and sayings The Bear, Quentin Barnes, had compiled over his years with The Firm. Two weeks later, Jack was headed to a national training center for The Firm. Upon returning from his training trip, Jack sets out on his first audit engagement to the Bakersfield Cement Plant. On his first engagement, Jack discovers two problems. First, he finds out that a clerk had “borrowed” money out of the petty cash box, and that the money is missing. Second, he discovers that another employee has been adjusting inventory numbers. This first audit experience serves as a great learning experience for students because it gives them an idea of what could happen on your first audit. Jack showed that although it was his first audit, he was going to make sure he did the right thing to address both issues. To conclude the chapter, Jack states that he left Bakersfield feeling that he “had not only learned a lot, but had done a good job as well.” This story helps the student to understand the full process of an audit and know what to do if problems are discovered. The chapter as a whole displays to the student how a new hire goes through the training process and then begins on their first audit. This allows the student to form an idea of what to expect when they begin their careers at their respective firms.
Risk assessments are vital to be included within a laboratory setting as it involves evaluating the potential risks which may be involved when completing an experiment or activity. The employer must be aware that risks which someone is exposed to at work must be reduced by them responsibly implementing precautions in order to make the setting safer. They need to analyse: what could possible go wrong? How likely is it? And what would be the consequences? These questions are regularly used when creating a risk assessment so that every risk sheet has a similar outline and meets the criteria of an effective risk assessment. It covers the general procedures, the working environment and the handling, storage and transportation of various substances.
Jameson Family Farms (JFF), a family owned business, grows, processes and packages a range of fruits and vegetables, but primarily specializes in growing and selling peanuts. The company has a niche for selling their particular salted and unsalted peanuts to grocery stores and baseball stadiums in the southeastern region of the US. The product offerings have been stable over the last five years, but the company began internet sales in 2010, which increased sales by about $19 million in 2010 over 2009. The commodity business for peanuts, however, is very competitive and seven to eight major companies vie for US sales. JFF’s has annual audits for lending
NOTE: In addition to the in-chapter and end-of-chapter exercises which serve as short cases you will find the following short cases arranged by course title that can also be utilized as short cases that require the student to access the authoritative literature to address the issue presented in the case. Solutions to the cases below are available to instructors on the Weirich Accounting & Auditing Research 8e instructor website at www.wiley.com/college/weirich. Other excellent sources of longer and more detailed cases include the Deloitte Trueblood cases and cases provided by various other firms.
in order to obtain stronger or more persuasive evidence, the “bank balance” reported by the
ASC 410-20-25-8 indicates that an asset retirement obligation is estimable if all of the following exist:
Even though Nightingale Hospital has a very detailed Site Identification and Verification Protocol, some areas do not meet JHACO’s standards. Updating the Universal Protocol and Preprocedure Hand-Off Check sheet will not only bring the facility into compliance but may eliminate any potential failure in communication between patient, caregiver and provider.
There are four things that an auditor needs to assess prior to performing an audit:
Student Cases with Solutions to accompany Accounting & Auditing Research: Tools & Strategies (7th edition)
Margin borrowing by investors allowed huge amounts of debt to be taken on without proper risk mitigation. Investors, knowing no better, had dumped small fortunes into the market. The fragile infrastructure of the system couldn’t handle the load and eventually caved in. Those companies that would survive the crash needed standardization and change in order for the investors’ faith to be restored. The Federal Trade Commission stepped in to fill this need. The first official document: “Verification of Financial Statements,” which was solely dedicated to provide guidance for audit, was released the same year as the crash. This document dove further than the previous decades’ pamphlets did, focusing in on small and medium sized companies, as well as the general need for the customized auditing tailored to each different companies, based on need.
documentation and changed audit trails. This problem can be used to lead into a discussion of
Merry-Go-Round (MGR) is a clothing retailer that was founded in 1968. The company’s locations were in malls that targeted the youth and teen market. In the late 1980s, the company was listed by Forbes magazine as one of the top 25 companies. By the early 1990s, sales fell due to stiff competition from other retailers. Facing bankruptcy, the company hired turnaround specialists from Ernst and Young (E&Y) to help overcome the financial crisis. However, the company filed for Chapter 11 reorganization and due to that a group of 9,000 creditors filed a lawsuit against E&Y saying they were the main reason for MGR’s decline.
SHAYYAN INNOVATION(PVT) LIMITED is Pakistani construction based company and has a registered office in the province of Sindh. The company operates in various fields of construction which include building, demolishing, altering and remodeling of all kinds of homes, plazas, multi-storied flats, business offices, shops, warehouses etc.