Just for Feet

If you work this problem as a group assignment, each group member should be prepared to

Prepare common-sized financial statements for Leslie Fay for the period 1987–1991. For that same period, compute for Leslie Fay the ratios shown in Exhibit 2. Given these data, which financial statement items do you believe should have been of particular interest to BDO Seidman during that firm’s 1991 audit of Leslie Fay? Explain.

It is the susceptibility of an account balance or a class of transactions to a material misstatement, assuming that there were no internal controls. The inherent risk at Telstra is that there may be certain types of misstatements that may not be identified during the course of audit. The inherent risk associated with the audit of Telstra is ascertained based on the nature of the business. Telstra Corporation Limited have these kinds of risks:- inventory valuation risk, intangible assets valuation risk, foreign currency risk, interest rate risk, tax risk, amendment risk and compliance risk. All the above stated risks pose potential material misstatements on the financial statements and thus need to be addressed (Telstra

Overall, there were three “red flags” E&Y was not aware of during the audit. First, they neglected the 500% net income increase from 1999-2001. This should have raised awareness because revenues only increased by 5% during that same period. Second, the internal auditors were denied access to some of the corporate ledgers. E&Y should have seen this as being one of the largest red flags. Third, the audit team failed to properly investigate employee complaints.

The auditor must remember that all information collected during the audit needs to be sufficient enough to further the audit process. The information must not only possess the two qualities, relevance and reliability, but it should also test various assertions. For instance, in the audit of Walmart, the auditor should make an attempt to acquire information such as financial statements from the company’s bank, as opposed to acquiring the statements from Walmart’s management. Taking such crucial information from Walmart’s management will put the reliability of that information into question. It is possible that management may manipulate the financial statements, so that they are more appealing to the public and investors. Management may do things

11. Investors and creditors are particularly interested in this financial statement because it tells them what is happening to the company’s most important resource?

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

Complete an income statement, balance sheet and statement of cash flows for 2011. Please provide information on any assumptions you make not already stated in the case.

1. The implication of this factor is there may be an increased risk of misstatement of bad debt expense and the allowance for bad debts. The auditors may decide to assign a more experienced auditor to this audit area. In addition, the auditors will decide to increase the evidence related to the adequacy of the

[pic]s a senior in a professional services firm, you have been assigned to plan the financial statement audit of a private company named Toy Central Corporation (TCC). In addition, the partner on the engagement has asked you to identify business risks that could adversely affect TCC’s sustained profitability, so that they can be brought to the attention of the company’s board of directors. These tasks will require you to draw on your knowledge of supply chain management, marketing, internal controls, audit assertions, and financial accounting.

 1. Assess the current financial health and recent financial performance of the company. What strengths and/or weaknesses would you highlight to Adeline Koh? From the ratio of profitability, the company had about 18% on operating margin, 16% on ROE, 8% on ROS and 5% on ROA in both 1998 and 1999. However, there was a downturn trend in profitability ratio in 2000. This could be the result of price competition because of the introduction of DVD manufacturing in the market. The profitability ratios rose again in 2001. It shows that the company had ability to recover its ROE and operating margin. If ROA is sound and debt levels are reasonable, a strong ROE is a solid signal that managers are

This report evaluates Bestwish 2010 financial statements to ascertain the accuracy of the company financial records, and to ensure that the company financial statements are in line with the laid down regulations established for the limited company. The report evaluates the viability of the company Financial Statements using:

1) Identify audit procedures that, if employed by Ernst & Whinney during the 1981 USSC audit, might have detected the overstatement of the leased and loaned assets account that resulted from the improper accounting for asset retirements.

Reliable Public Services Inc. (RPSI), 200 employee multi-discipline firm, financial statements comprise balance sheet, statement of retained earnings, income statement, and statement of cash flows. In order to determine how healthy the firm is, it is essentially important to analysis the key financial indicators. These indicators are numerical accounting ratios show the firm financial status. Analyzing the productivity ratios, which measure the overall efficiency of a firm’s operations, then the profitability ratios, which measure the overall of effectiveness of a firm’s operations, next the activity ratios, which measure how well certain resources are being used, finally, the liquidity ratios, which measure the extent to which a firm is financed by debt and equity, is segmented for two-fiscal-years periods of Dec 31st, 2009 and Dec 31st, 2010, respectively. All correct-amount of dollars are presented in thousands except the ratios.

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?