Shelly is an internal audit manager of Air Clean and Safe Express, Inc., a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial
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Shelly is an internal audit manager of Air Clean and Safe Express, Inc., a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company.
Interview with Auditee (Independent Situation)
Shelly: What about employee turnover?
Norvs: We haven’t had a problem with employee turnover. We expect some turnover in this type of business and knows how to deal with it. We try to prevent any employee concerns by maintaining an open-door policy and encouraging employees who have questions or concerns about their responsibilities to ask for help or come talk with us. If a problem should arise that might affect others, May or I will immediately address the problem at the monthly office meeting, making all employees aware of the issue. Both May and I work hard to ensure that any problem is resolved promptly.
Norvs leaves for a while to give an estimate and Shelly continues her observations of the business.
The Company seems to have no problem with employee turnover because it has strong:
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- Shelly is an internal audit manager of Air Clean and Safe Express, Inc., a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: What about employee turnover? Norvs: We haven’t had a problem with employee turnover. We expect some turnover in this type of business and knows how to deal with it. We try to prevent any employee concerns by maintaining an open-door policy and encouraging employees who have questions or concerns about their responsibilities to ask for help or come talk with us. If a problem should arise that might affect others, May or I will immediately address the…Shelly is an internal audit manager of Air Clean and Safe Express, Inc., a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: What about employee turnover? Norvs: We haven’t had a problem with employee turnover. We expect some turnover in this type of business and knows how to deal with it. We try to prevent any employee concerns by maintaining an open-door policy and encouraging employees who have questions or concerns about their responsibilities to ask for help or come talk with us. If a problem should arise that might affect others, May or I will immediately address the…Shelly is an internal audit manager of Air Clean and Safe Express, Inc., a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: And how about your accounting department? How big is it, and who oversees the accounting process? Norvs: The accounting department of the Company consists of five part-time clerks, including the two encoders, who are all paid weekly. Most of them are working students taking accountancy or business-related course. Red trains all new accounting help when they are first hired. Typically, they stay on with us until they graduate which usually covers two full…
- Shelly is an internal audit manager of Air Clean and Safe Express, Inc., a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: And how about your accounting department? How big is it, and who oversees the accounting process? Norvs: The accounting department of the Company consists of five part-time clerks, including the two encoders, who are all paid weekly. Most of them are working students taking accountancy or business-related course. Red trains all new accounting help when they are first hired. Typically, they stay on with us until they graduate which usually covers two full…Shelly is an internal audit manager of Air Clean and Safe Express, Inc. a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: One thing I’d like to ask – have you or your sister May set out any goals for the future? Norvs: May and I have spent a lot of time talking about our goals and objectives, but we’ve never formally recorded them anywhere. Our long-term goals are fairly uncertain, but we’re hoping to build our business to the point where we can potentially retire early. We both agree that our future plans would include expanding our sales territory, increasing advertising,…Shelly is an internal audit manager of Air Clean and Safe Express, Inc. a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: One of the accounting clerks mentioned that you’re thinking about making a change in the accounting system. Norvs: As a matter of fact, Red has been looking into using a new web-based accounting software that should make the bookkeeping process an easier task for the clerks. This software includes a budgeting system that should help control costs and identify those areas that need attention. Because I’ve always monitored the company’s expenses, I didn’t…
- 41. Shelly is an internal audit manager of Air Clean and Safe Express, Inc. a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: Are there any issues of concern that you have regarding the audit? Norvs: Not really. I’m proud of the company. The company to date, has no record of serious problems and has rarely had a problem with bad debts, since most of our receivable balances are collected within two to three weeks. Shelly: I understand that the company does not have an audit committee, which is typical of an organization this size. Can you tell me if the company has a board of…14. Shelly is an internal audit manager of Air Clean and Safe Express, Inc. a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: That should about do it for now, until I can get in to do some preliminary audit investigation. But before I leave, I’d like to ask you a few more general questions. To start with, can you tell me what you feel is responsible for the company’s recent success? Norvs: Well, Shelly, because our company uses the latest technology when it comes to cleaning air conditioning units compared to the traditional methods used by our competitors. Our customers can…Tracy Smith, CPA, is in charge of the audit of Olympic Fashions, Inc. Seven young members of the public accounting firm's professional staff are working with Smith on this engagement, and several of the young auditors are avid skiers. Olympic Fashions owns two condominiums in Aspen, Colorado, that it uses primarily to entertain clients. The controller of Olympic Fashions has told Smith that she and any of her audit staff are welcome to use the condominiums at no charge any time that they are not already in use. How should Smith respond to this offer? Explain.
- You are an audit senior of Beckham & Co and have been allocated to the audit of Willian Co (Willian), a listed company which has been an audit client for eight years and specializes in manufacturing musical instruments.Spice Posh was the audit engagement partner for Willian and as she had completed seven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit partner, ShakiraPique, has suggested that in order to maintain a close relationship with Willian, Spice should undertake the role of independent review partner this year. In addition, Willian has requested that Spice assist them by attendingtheir audit committee meetings, as a non-executive director has recently left the company. Willian has also asked Shakira and the other partners at Beckham & Co to help them in recruiting a new non-executive director.The total fees received by Beckham & Co for last year equated to 16% of the firm’s total fee income. The…Mr. Arty works for Smile Accounting Firm as a senior accountant. Currently, he is doing a review of rental property compliance testing of rental receipts and expenses of the property owned by the client. He determines that the staff accountants tested only two tenants per property, instead of the three required by the audit program based on materiality considerations. However, to request more information from the client would cause massive delays, and the manager on the engagement is pressing hard for the information now. The manager did approach the client, who stated that she “needed the report yesterday.” The manager reminds Arty that no problems were found from the testing of the two properties, in past years the workpapers called for just two properties to be reviewed, the firm has never had any accounting issues with respect to the client, and he is confident the testing is sufficient. Explain the relationship between the manager’s explanations and the judgment tendencies.36. Shelly is an internal audit manager of Air Clean and Safe Express, Inc. a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers. This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company. Interview with Auditee (Independent Situation) Shelly: One of the accounting clerks mentioned that you’re thinking about making a change in the accounting system. Norvs: As a matter of fact, Red has been looking into using a new web-based accounting software that should make the bookkeeping process an easier task for the clerks. This software includes a budgeting system that should help control costs and identify those areas that need attention. Because I’ve always monitored the company’s expenses, I didn’t…