Bud's Big Blue Manufacturing Case Study

Professional auditing standards identify 5 “management assertions” that commonly underlie a set of financial statements. These 5 assertions are: occurrence, completeness, valuation/allocation, rights/obligations, and presentation/disclosure. With respect to the audit of Paragon’s construction project, some of these key assertions were overlooked by auditor Arthur Anderson. The main assertions that Anderson should have focused on for this audit include occurrence, valuation, and disclosure.

Our fourth criterion was complexity of the processes involved. In our analysis, the more complex processes often result in higher chances for imperfection or failure. We also felt that processes that require a trained specialist to enhance would not benefit from our analysis because of our lack of understanding the methods. The fifth criterion was personal interest. This was to ensure we were all engaged and interested in working on the decided project.

1) Why might the auditor find these results not very useful if he or she is using the information to select invoices for confirmation?

Confirmation is the process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions. It describes the concept of assessing inherent and control risks, determining the acceptable level of detection risk, and designing an audit program to achieve an appropriately low level of audit risk. The auditor uses the audit risk assessment in determining the audit procedures to be applied, including whether they should include confirmation. The greater the combined assessed level of inherent and control risk, the greater the assurance that the auditor needs from substantive tests related to a financial statement assertion.

In all cases, Courts list four criteria that should be used when deciding if scientific testimony should be admitted. The four criteria are: whether the technique improving falls through data collection, whether the scientific findings have been subjected to a parent view, how often a test or technique produces incorrect results, and whether the conclusions are generally excepted in the relevant scientific community (p. 15).

This paper contains the summary of the details and results of the audit tests on

2. Identify and briefly describe the specific fraud risk factors present during the 2000 NextCard audit. How should these factors have affected the planning and execution of the engagement?

Another factor I would choose would be how much are they spending to analyze their events. I would want to critique this area because they should not be using too much money on events. This would either make the company successful or really hurt the company as a whole.

Synopsis Crosby Manufacturing is a $250 million/year electronics component manufacturing firm that needs new systems in order to even meet the current competition, let alone grow the business, improve projects, and increases their quality and customer base. Wilfred Livingston, President of Crosby, wants to computerize project financial reporting and replace their current system with more advanced technologies. While everyone in the company realizes this is a necessity, the issues surround the manner in which the plan was initiated and rolled out. There are three main issues surrounding this situation:

List the fraud risk factors that the CPA firm might encounter if they accept this audit engagement. Be sure to include a discussion of all items that will probably require special attention during the audit. For each of these fraud risk factors, indicate how the auditor should follow up on each potential problem if the engagement is accepted. Use the following format:

Companies strive to choose not only the best marketing channels, but also the best profitable channel. A profitable channel can promote and successfully sell out of a product that might not otherwise turn a profit for their producers (New Charter University 2015). “The calculations from the cost accountant for the retail segment accounts were 60 percent of sales, and for the foodservice segment accounts were 40 percent. The cost accountant believes that both channels are profitable. The accountant also believes that the company achieves an overall average gross margin of 60 percent on its sales (Bowersox, D. J., Closs, D. J., Cooper, M. B.,

In the event of no reply to a request for positive confirmation, as an auditor I need to ask for further requests, contact the manager and ask him to get a hold of the customer. In case of no response from the customer, I should examine the document I have in hand such as sales orders, sales invoices, shipping orders, and bills of lading.

In mid-September 2005, Ashley Swenson, the CFO of large CAD/CAM equipment producer must choose whether to pay out profits to the firm¡¦s investors or repurchase stock. On the off chance that Swenson pays out profits, she should likewise settle on the extent of the payout.

In the early 20th century of America, conditions in a workplace were very different then it is in the present day. Because of this, many tragedies occurred since that time. On March 25, 1911 at precisely 4:45 p.m. the fire alarm was pulled on the eighth floor of the Triangle Shirtwaist Company factory. Being a shirtwaist company, the factory was filled with an abundance of fabric, which was highly flammable. The factory`s workers were mostly young female immigrants of an Italian or Jewish origin. Out of 500 employees that worked in the factory, 146 people were killed. As a result of this disaster, legal action was taken against the factory workers, modifications and reforms were made to the fire safety rules, and advances were made in workplace conditions. The government and the employers are both responsible for ensuring proper standards in the workplace because the government must make the laws, and the employers must enforce them. Although the employees must also follow the rules and laws to stay safe themselves, the responsibility is mostly in the government and employers.

KNJ Manufacturing, Inc. should look into getting with a copy of the approved vendor lists for the customers they have. And, begin to supply raw materials for their customers instead of just “machining and labor” only. They should be looking into outsourcing their work with the local shops to find ways of increasing their offerings to include things, such as, heat-treating, mechanical testing, material coating and hardness testing. KNJ should offer one-stop shop capabilities instead of losing opportunities because the customer does not want to send the part to multiple locations to get simple work done. Currently, KNJ does not have the license to do heat-treating, hardness testing, or coating, but this is something that KNJ Manufacturing may want to consider offering now or in the immediate future, to increase their market share and desirability in an already slow market.