Essay about Zoom SnowBoards: Audit Planning Document

911 Words Sep 17th, 2014 4 Pages
In-Class Case: October 14, 2013
Zoom SnowBoards: Audit Planning Document
Please work in groups of two.
Read the Zoom Snowboard case (on Canvas). Please stop at page 1205 …just glance through page 1206. Then, please complete the template below. This audit planning case is worth 5% of your grade. It requires you to be familiar with Chapters 6, 8 and 9.
I only need one issue per row. The information must be specific (indicating that you have read the case) and not vague/ambiguous.
While this is an “in-class case”, you may finish this in any other space other than the classroom on 10/14/2013. There will be no “lecture” on 10/14/2013.
Submission date: 10/21/2013.
Potential Issue/Flag
Financial Reporting Risk
Impacts Acceptable
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Overstated net income implies assertion of occurrence, completeness and accuracy.
4. Supply Chain Issue: No internal controls for in-house manufacturing of snowboards
Raw material and finished goods inventory may be over/under-stated
AAR can decrease as risk of misstatements on the Balance Sheet increases. External users may rely heavily on reported assets. Over/under-statement of inventory implies assertion of existence, completeness, and valuation and allocation..
5. Business strategy Issue: Expand business product line (apparel product) → Company’s operation is effected Affect the risk of material misstatement that related to inventory and other related assets IR goes up: associates with the changing in nature of the company → the new line of product might not be successful
CR goes up: increase the size of the company → more internal control concern over new line of product’s inventories.
AAR goes down: risk of misstatement on the Income Statement increase Over/Under state inventory, net income, sales implies assertion of occurrence, completeness and accuracy
6. Revenue Recognition issue: TAS paid Zoom $500,000 for 5 year exclusive rights. The entire $500,000 was included in Zoom’s 3rd quarter results.
Risk for inflated revenue and net income, revenue being recognized when received instead of when earned.
AAR can decrease as risk of misstatements on the Income Statement increases. External users may rely heavily on reported Net