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ZPM is a listed limited liability company with a year end of June 30. ZPM’s main activity is selling home improvement of Do-It-Yourself (DIY) products to the public. Products sold range from nails, pain and tools to doors and showers: some stores also sell garden tools and furniture. Products are purchased from approximately 200 different suppliers. ZPM has 103 stores in eight different countries. ZPM has a well-staffed internal audit department, who report on regular basis to the audit committee. Areas where internal and external may carry out work include:
- Attending year-end inventory count in 30 stores. All are visited rotationally.
- Checking the internal controls over the procurement systems.
Required;
For each of the above two areas, discuss;
- The objectives of the internal auditor;
- The objectives of the external auditor; and
Whether the external auditor will rely on the internal auditor, and if reliance is required, the extent of that reliance.
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- Apricot is an information technology (IT) manufacturing company which has been dealing in various IT equipment over 70 years. It operates from one central site which includes the production facility, warehouse and administration offices. You are an audit senior in Juit Company, and you are commencing the audit planning of Apricot Company for the year ending 31 April 2019. Apricot Company sells all of it IT equipment to multinational clients, with 75% being sold to a multi-million IT dealer. The company has a one-year contract to be the sole supplier of IT equipment. In order to secure the contract, the company reduced prices and offered 100 days credit period, while its normal credit period is 28 days, which is an equivalent of month. Currently, Apricot Company has strategically reduced the level of products directly manufactured and rather started to import significant amount of its IT equipment from India. Nearly 65% of the IT equipment is imported and 35% manufactured. Purchase…a) Apricot is an information technology (IT) manufacturing company which has been dealing in various IT equipment over 70 years. It operates from one central site which includes the production facility, warehouse and administration offices. You are an audit senior in Juit Company, and you are commencing the audit planning of Apricot Company for the year ending 31 April 2019. Apricot Company sells all of it IT equipment to multinational clients, with 75% being sold to a multi-million IT dealer. The company has a one-year contract to be the sole supplier of IT equipment. In order to secure the contract, the company reduced prices and offered 100 days credit period, while its normal credit period is 28 days, which is an equivalent of month. Currently, Apricot Company has strategically reduced the level of products directly manufactured and rather started to import significant amount of its IT equipment from India. Nearly 65% of the IT equipment is imported and 35% manufactured. Purchase…a) Apricot is an information technology (IT) manufacturing company which has been dealing in various IT equipment over 70 years. It operates from one central site which includes the production facility, warehouse and administration offices.You are an audit senior in Juit Company, and you are commencing the audit planning of Apricot Company for the year ending 31 April 2019.Apricot Company sells all of it IT equipment to multinational clients, with 75% being soldto a multi-million IT dealer. The company has a one-year contract to be the sole supplier of IT equipment. In order to secure the contract, the company reduced prices and offered 100 days credit period, while its normal credit period is 28 days, which is an equivalent of month.Currently, Apricot Company has strategically reduced the level of products directly manufactured and rather started to import significant amount of its IT equipment from India. Nearly 65% of the IT equipment is imported and 35% manufactured. Purchase…
- Your audit firm has been the statutory auditors for Apenkwa Co. Ltd. for the last three years. The company prepares its financial statements to December 31 each year. Apenkwa Co. is into production of consumable goods. Apenkwa has 20 wholesalers and 73 retailers for which goods are sold to. During the year ended 31st December, 2018, all the 12,503 consumable goods produced were sold.Selling price for one good is GHC 100 (that is GHC 1,250,300 for total sales value) but only GHC 1,200,300 is shown in the cash book account.RequiredAs an auditor of your firm, state the audit work you would carry out to obtain audit evidence in reference to above caseWillingham Construction is in the business of building high-priced, custom, single-family homes. The company,headquartered in Anaheim, California, operates throughout the Southern California area. The construction periodfor the average home built by Willingham is six months, although some homes have taken as long as nine months.You have just been hired by Willingham as the assistant controller and one of your first tasks is to evaluate thecompany’s revenue recognition policy. The company presently recognizes revenue upon completion for all of itsprojects and management is now considering whether revenue recognition over time is appropriate.Required:Write a 1- to 2-page memo to Virginia Reynolds, company controller, describing the differences between theeffects of recognizing revenue over time and upon project completion on the income statement and balance sheet.Indicate any criteria specifying when revenue should be recognized. Be sure to include references to GAAP asthey pertain to…ACCO Ltd is a large producer of organic medicinal products. The audit report for the year ended 30 June 20X8 was signed on 6 August 20X8 and along with the financial report was mailed to shareholders on 11 August 20X8. Consider the following independent events. Assume that each event is material. On 5 July, ACCO Ltd entered into a new contract to supply organic facial and skin treatment products to MYA, a new major department store. The contract was similar in nature to other contracts previously negotiated. ACCO Ltd has invested significant funds in developing a new range of organically sourced skin cancer treatment ointments. On 8 July, ACCO Ltd applied for a patent for the ointment, only to discover that a competitor had lodged a similar application on 20 June. The granting of ACCO Ltd’s application is now in serious doubt. Internal audit has uncovered a major fraud at one of ACCO Ltd’s branches. The fraud was perpetrated by two senior staff, acting in collusion over a number of…
- Smith & Sons is a CPA firm that provides proprietary software to its clients. One of its software packages sells for $150 and contains pre-programmed tutorials on basic accounting concepts. Another product sells for $3,000 and contains Smith & Sons’ archive of accounting standards and articles, which Smith & Sons updates on a weekly basis and downloads to archive users for the two years following purchase of the product. If a customer purchases both software packages on June 1, 2021, how much revenue should Smith & Sons recognize for the year?ACCO Ltd is a large producer of organic medicinal products. The audit report for the year ended 30 June 20X8 was signed on 6 August 20X8 and along with the financial report was mailed to shareholders on 11 August 20X8. Consider the following independent events. Assume that each event is material. 1. On 5 July, ACCO Ltd entered into a new contract to supply organic facial and skin treatment products to MYA, a new major department store. The contract was similar in nature to other contracts previously negotiated. 2. ACCO Ltd has invested significant funds in developing a new range of organically sourced skin cancer treatment ointments. On 8 July, ACCO Ltd applied for a patent for the ointment, only to discover that a competitor had lodged a similar application on 20 June. The granting of ACCO Ltd’s application is now in serious doubt 3. Internal audit has uncovered a major fraud at one of ACCO Ltd’s branches. The fraud was perpetrated by two senior staff, acting in collusion over a…You are an audit senior in Riskam and Co and you are commencing the planning of the auditof CariBev Co for the year ending 31 August 2020.CariBev Co is a drinks manufacturer and has been trading for over 20 years, it operates fromone central site, which includes the production facility, warehouse and administration offices.CariBev sells all of its goods to large retail stores, with 60% being to one large chain storeFoodForAll.The company has a one year contract to be the sole supplier of drinks to FoodForAll. Itsecured the contract through significantly reducing prices and offering a four-month creditperiod, the company’s normal credit period is one month. Goods in/purchasesIn recent years, CariBev has reduced the level of goods directly manufactured and insteadstarted to import drinks from South Asia. Approximately 60% is imported and 40%manufactured.Within the production facility is a large amount of old plant and equipment that is nowredundant and has minimal scrap value. Purchase…
- You are an audit senior in Riskam and Co and you are commencing the planning of the auditof CariBev Co for the year ending 31 August 2020.CariBev Co is a drinks manufacturer and has been trading for over 20 years, it operates fromone central site, which includes the production facility, warehouse and administration offices.CariBev sells all of its goods to large retail stores, with 60% being to one large chain storeFoodForAll.The company has a one year contract to be the sole supplier of drinks to FoodForAll. Itsecured the contract through significantly reducing prices and offering a four-month creditperiod, the company’s normal credit period is one month. Goods in/purchasesIn recent years, CariBev has reduced the level of goods directly manufactured and insteadstarted to import drinks from South Asia. Approximately 60% is imported and 40%manufactured.Within the production facility is a large amount of old plant and equipment that is nowredundant and has minimal scrap value. Purchase…JW Office Supplies, Inc., is a wholesale distributor of office supplies. It sells pencils and pens, paper goods (including computer paper and forms), staplers, calendars, and other items, excluding furniture and other major items such as copy machines that you would expect to find in an office. Sales have been growing at 5 percent per year during the past several years. Mr. Kay, the president of JW Office Supplies, recently attended a national office supplies convention. In conversations during that convention, he discovered that sales for ABC Office Supplies competitors have been growing at 15 percent per year. Arriving back home, he did a quick investigation and discovered the following: JW Office Supplies customer turnover is significantly higher than the industry average. JW Office Supplies vendor turnover is significantly lower than the industry average. The new market analysis system was supposed to be ready two years ago but has been delayed for more than one year in systems development. A staff position, reporting to the president, for a person to prepare and analyze cash budgets was created two years ago but has never been filled. Mr. Kay has called on you to conduct a systems survey of this situation. You are to assume that a request for systems development has been prepared and approved. The information system at JW Office Supplies is much like that depicted in Chapters 10 through 16. Make and describe all assumptions that you believe are necessary to solve any of the following: a. What are the specific tasks of this systems survey? b. Indicate specific quantifiable benefits and costs that should be examined in assessing the economic feasibility of any solutions that might be proposed. Explain how you would go about quantifying each benefit or cost. c. Propose and explain three different scopes for the systems analysis. Use a context diagram to describe each scope alternative. Hint: What subsystems might be involved in an analysis?Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for-profit and not-for-profit entities. Two years ago, Luisa Mellina, Ginnians partner in charge of operations, became concerned about the amount of audit time required by not-for-profit entities. As a result, she instituted a series of training programs focusing on the auditing of not-forprofit entities. Now, she would like to see if the training seemed to work. So, she ran a multiple regression on 22 months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of not-for-profit audits, and the hours of training in the audit of not-for-profit entities. The following printout was obtained: Required: 1. Write out the cost equation for Ginnians audit professional time. 2. If Ginnian expects to have 9 audits of not-for-profits next month and expects that audit professionals will have a total of 130 hours of not-for-profit training, what is the anticipated cost of professional time? 3. Are the hours spent auditing not-for-profit entities positively or negatively correlated with audit professional costs? Is percentage of experienced team members positively or negatively correlated with audit professional cost? 4. What does R2 mean in this equation? Overall, what is your evaluation of the cost equation that was developed for the cost of audit professionals?
