Denise Vaughan is presently the partner in charge of the engagement and Carolyn Volmar is the audit manager. Control Testing — Sales Processing 1. While the financial rewards for meeting or exceeding these targets are great, the targets are deemed very challenging.
Increased automation enabled Biltrite to decrease its factory workers from 3, workers ten years ago to 2, workers just two years ago. In case of no response from the customer, I should examine the document I have in hand such as sales orders, sales invoices, shipping orders, and bills of lading.
In addition, many middle- and lower-level managers feel the supporting budgets lack the necessary resources to meet financial objectives. To address this problem, Lawton has begun forming a small enterprise risk management Copyright Cengage Learning.
Materials and supplies consist primarily of paint and steel. The cutoff statement received directly from the bank support the existence, completeness and valuation objectives. The vice president of production observed that automation enabled Biltrite to significantly increase production-worker productivity.
This practice is one of the earning inflation devices that can be used to overstate net income. Also, in terms valuation, additional audit needs to be performed because from the confirmed amount owed, it is not sure if it will be collected.
Inventory cut off errors: Sales and Purchases Cutoff Tests 1. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. In an attempt to combat the strong competition from foreign bicycle producers, managers at Biltrite, particularly those responsible for marketing and controlling production costs, have been given demanding performance targets in recent years.
Biltrite will be your first audit. Upper misstatement limit is determined by adding the misstatement basic precision and incremental allowance for sampling error.
The factory, which employs 2, workers, was built inwas refurbished and updated five years ago, and it is now quite automated. For purposes of this case, the income tax effects of audit adjustments have been ignored. However, Biltrite has experienced significant growth in sales and profitability for the current year.
On the other hand she did not check if invoices received in should be recorded in and therefore applicable to the audit and if they were part of year-end adjustment for the same year.
Incremental allowance for sampling error increases when there is an increase in the sampling error. Confirmation of bank balances is considered highly reliable whereas confirmation of a department store Products are shipped to the warehouses upon completion, and from the warehouses they are shipped to licensed dealers in the respective regions.
This helps the auditor to better calculate the amount that is uncollectible from customers 2. And its purpose is to develop a projected error for all the sampling interval. In addition, the regional units employ warehouse personnel and salespersons.
Prior to that time he had been a part of the Biltrite audit team as an assistant. However the bills of ladings that were missing keep the auditors skeptical and make them look further for material information.
Also, the other thing that looks suspicious is the inflated earnings showed. Hourly employees, consisting of the production workers and warehouse personnel, are paid weekly; salaried employees are paid biweekly.
Lawton believes that success can be attained via aggressive marketing and containment of production costs. In recent years he has become increasingly aggressive, believing that strategic changes must be bold, frequent, and swift in order to prevail in the highly competitive bicycle industry.Biltrite Practice Case.
Module III: Control Testing – Sales Processing. Module IX: Analysis of Interbank Transfers. 1. A. The purpose of analyzing inter-bank transfers for a short period before and after the balance sheet due in to check if there are any cash cutoff errors. B & C.
the check showing $3, received from Lawton. The following pages in this manual contain the solutions to the Biltrite Bicycles, Inc. audit practice case.
The solutions are presented by module number. Answers to the narrative questions are presented first, followed by the completed working papers as solutions to those parts requiring audit working paper completion.
Description of the Practice Case This case has two learning objectives - Audit Module introduction. First, it provides the student an opportunity to apply auditing concepts to a “real-life” audit client. The client, Biltrite Bicycles, Inc., operates within a unique business climate and internal control environment, and the student must assess inherent risk.
1 Biltrite Adjusting Journal Entries (AJEs) and Reclassifications WP D BILTRITE SKATEBOARDS LTD Audit Adjustments and Reclassifications.
the deposit in transit. Module IX: Analysis of Interbank Transfers 1. A. The purpose of analyzing inter-bank transfers for a short period before and after the balance sheet due in to check if there are any cash cutoff errors. B & C. the check showing $3, received from Lawton was in fact an interbank transfer from Bank Two to Dollar Bank.
We will write a custom essay sample on Biltrite case Module I through X specifically for you for only $ $/page. Biltrite Practice Case. Module III: Control Testing – Sales Processing Module IX: Analysis of Interbank Transfers.
1. A. The purpose of analyzing inter-bank transfers for a short period before and after the balance.Download