Essay on Audit Module1

6640 Words27 Pages
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
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