Campbell Soup Compan Audit

994 Words Jul 25th, 2008 4 Pages
Campbell Soup Company
Campbell was founded shortly before the start of the Civil War. Abraham Anderson and Joseph Campbell began manufacturing canned vegetables and fruit preserves. In 1976, Campbell bought out Anderson’s interest and renamed the firm the Joseph Campbell Preserving Company. Later, Arthur Dorrance was Campbell’s new partner. In the early 1920s, John Dorrance, Arthur Dorrance’s nephew, was the sole owner of the Campbell Soup Company, which was the largest producer of canned soup products. Unfortunately, as the twentieth century was coming to a close, the nation’s appetite for condensed soup products was waning. The weakening demand prompted the company’s executives to use an assortment of questionable
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In this case, Campbell pledged that in the future Campbell would provide “proper accounting for nonperformance related discounts, but they didn’t. The auditors might be reckless because they did not perform professional due care.

Shipping to the Yard
The plaintiffs pointed out that Campbell had recorded all customer sales on an FOB shipping point basis. In fact, the actual shipping terms for many of Campbell’s sales were FOB destination. PwC was aware of this practice and had decided that since Campbell used the sales cutoff policy consistently, it would not have a material effect on Campbell’s operating results. The judge found this conclusion reasonable and did not pursue the matter any further.

PwC’s conclusion may reasonable and Campbell’s practice may not have a material effect on Campbell’s operating results, but it still causes a misrepresenting report. An auditor should express a explanation on the audit opinion.
Guaranteed Sales
Although this practice was not fraudulent, the plaintiffs insisted that Campbell had a responsibility to record a reserve or allowance in anticipation of substantial customer returns likely to result from theses “sales.” Despite the fact that a large percentage of product sold under guaranteed sales contracts was returned, the company’s accounting staff apparently never recorded appropriate reserves for those sales returns. The plaintiffs charged that PwC must have known about Campbell’s bogus sales, but

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