Big Rock Essay

5264 Words Feb 2nd, 2012 22 Pages
First CLASS AUDIT Group | Audit Report | Big Rock Brewery Income Trust | | Andrew Code
Tyler Hakesley
Carly Johnson
Wasay Wahid
Leanna Whyte | 12/5/2011 |

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Knowledge of the Business 1 Position within the Industry 3 Economic Position 3 Related Party 4 Corporate Governance 4 Significant Risks 5 Audit Risk 7 Overall Audit Strategy 8 Materiality 9 Fraud Risk Assessment 9 Risk Assessment Procedures 9 Key Risk Factors 10 Factors Decreasing Fraud Risk 10 Assessment of Possible High Risk Accounts 10 Overall Conclusion 11 Analytical Procedures 11 Information System 12 Expenditure Cycle Analysis 13 Going Concern Assessment 14 Top Three Laws & Regulations 15 Laws & Regulations
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Since the company commenced they have been constantly upgrading the technology of their operations. In this year alone they have spent $638,000 to improve their brewery operations. Overall, the most significant trend in the beer industry has been the price war that was started by the multinational breweries and will be discussed further on page 5.
Currently, Big Rock has 131 employees including 53 in sales and marketing, 63 in brewery operations, and 13 employees in management. None of the employees are involved a collective bargaining agreement or are unionized. The breakdown of the client’s officers and board of directors is illustrated in Appendix D. There are currently 6,057, 687 common shares of which 35.88% and 262,000 stock options are held by the officers and directors of the company. The shareholders and the stock options should be considered as factors that increase inherent risk.
Big Rock has two available sources of financing. The first one is a $6,500,000 credit facility with the Alberta Treasury Bank and is available in three lump sums consisting of $2,000,000, $2,000,000, and $2,500,000. This money will be used to finance capital asset purchases and after one of its tranches has been given out the credit facility will be converted into a reducing term loan where the interest will be paid at prime plus 1.25%. The second source of financing is a $5,000,000 demand operating facility also with the Alberta Treasury

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