What generic procedures are used to obtain audit evidence?

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Question 1

The audit of most large companies will focus on testing the system of controls with only limited amounts of substantive testing.

You are conducting the audit of Plexus Ltd a manufacturer of bottle tops. The audit work reveals:

  1. the sales ledger is reconciled to the nominal ledger by the cashier who is also responsible for the bank reconciliation.
  2. goods received notes for purchased goods are not prenumbered.
  3. the company has no predefined limit for seeking approval for capital expenditure transactions.
  4. statements are not sent to customers showing the amounts currently outstanding for goods sold by Plexus.
  5. Plexus does not reconcile statements received from suppliers for goods and services it has purchased.
  6. There is only one member of the wages department who does all of the calculations and no reconciliation of the movement in wages from one month to another is prepared.

For each of the items numbered 1 to 6 above explain why this is a control weakness, also indicating for each case how the truth and fairness of the financial statements may be affected by the weakness.

(3 marks each in total 18 marks)

Question 2

  • What generic procedures are used to obtain audit evidence?
  • Explain how those procedures could be used to verify balances and disclosures in the financial statements about:
    (i) The factory premises (4marks)

(ii) Motor vehicles (4marks)

 

 

 

 

 

 

Write a five- to seven-page comparative financial statement analysis of the three companies listed below.

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Write a five- to seven-page comparative financial statement analysis of the three companies listed below, formatted according to APA style as outlined in the Ashford Writing Center. In this analysis, you will discuss the financial health of these companies with the ultimate goal of making a recommendation to other investors.
Your paper should consist of the following sections: Company Overview, Comparison of Accounting Methods, Ratio Analysis, Final Recommendation, Conclusions.

You will also submit an appendix as a separate document. Additional research may be necessary to provide company background information, or to support your analysis and recommendations.

Your paper needs to include a minimum of two scholarly, peer-reviewed, and/or credible resources.

Download the Form 10-K for each company.

The Coca-Cola Company: Form 10-K.
Financial statements and notes start on page 60.
-Accounts receivable, page 81
-Inventories, page 82
-Depreciation, page 96
-Goodwill, page 83

Dr. Pepper Annual Report
-Click on the 2018 Annual Report
-Accounts receivable, page 72
-Inventories, page 72
-Depreciation, page 73
-Goodwill, page 74

PepsiCo Annual Report :Financial statements and notes start on page 79.
-Accounts receivable, page 124
-Inventories, page 89
-Depreciation, page 95
-Goodwill, page 88

Here is a breakdown of the sections within the body of the assignment (Use paragraph headings to indicate each section):

Company Overview
-Provide a brief overview of the three companies (at least two pages). What industry is it in? What are its main products or services? Who are its competitors? Where is the company located?

Ratio Analysis
-Calculate the current ratio, quick ratio, gross profit percentage, inventory turnover, accounts receivable turnover and asset turnover ratios for all three companies for the current year.

Note: Cash includes cash and cash equivalents and short term investments.
Explain how the ratio is calculated and discuss and interpret the ratios that you calculated.
Discuss potential liquidity issues based on your calculations of the current and quick ratios.
Are there any factors that could be erroneously influencing the results of the ratios?
Discuss liquidity issues of the three companies.

Comparison of Accounting Methods
In your paper, ascertain from the notes of the financial statements the following:
-Explain the difference between the allowance method and the direct write off method for accounts receivable. Document the method used for each of the three companies.
Explain the difference between the straight line, double declining balance and the unit-of-production depreciation methods. Document the method used for each of the three companies.
Explain the difference between LIFO and FIFO and document the method used for each of the three companies.
Explain the different categories of intangible assets and document the method used for each of the three companies.

Recommendation
-Based on your analysis, would you recommend an individual invest in these companies? What strengths do you see? What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company, as long as you provide support for your position.

Conclusions
-Include an appendix in a separate document. The appendix must include screenshots of the financial statements and information obtained for the receivables, intangible assets, depreciation, and inventory.

Describe a minimum of two ways in which a personal budget is similar to a business budget.

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Your essay must include a cover page, introduction, body, conclusion, and a reference page.
To learn more about cost you decided to select 2 (two) companies one that uses job order and another process costing. For each of the two types of companies you selected from above, provide an example of each of the following costs your selected companies might incur. Fully explain your examples.
Direct material.
Direct labor
Manufacturing overhead
Selling and administrative expense. Be sure to explain and support your answers.
Suppose you have decided to start a business producing and selling a product of your choice answer the following questions related to your product:
Briefly describe the product you would produce and sell. What market will you target this product for? At what price would you sell your product? Make a projection of your sales in units for the first year of operations.
Make a detailed list of the materials needed to make your product. (Use the textbook and/or outside research as necessary.) How much in materials will you need for the year? What is the cost of these materials?
Make a list of expenses you would incur in your business venture. (Use the textbook and/or outside research as necessary.) Examples include rent, utilities, insurance, direct labor, manufacturing overhead costs and so on. Estimate the cost of each of these expenses per year.
Classify all of your expenses as either fixed or variable, and calculate how many units of your product you would need to sell to break even. Show your work.
How much operating income would you like to earn in the first year? Calculate how many units you would need to sell to break even, and to meet your target profit.
How realistic is your potential venture? Do you think your target profit is achievable? Explain.
find resources that confirm the importance of budgeting to organizations and answer the questions below in essay format. Briefly describe your understanding of how and why managers use budgets.
What types of budget approaches are typically used in for-profit companies as opposed to non-profit organizations? Explain at least two different budget methods.
What type of budget will you use for your company?
Describe a minimum of two ways in which a personal budget is similar to a business budget. Elaborate your response.

Define and discuss in detail managerial accounting.

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Red Duv Aviation Simulation Paper Submission
You have come to the end of your training at Red Duv Aviation. You have recently learned that managerial accountants earn between $43,424 and $101,153 per year. You have also learned that Red Duv pays managerial accountants in the upper range of this amount. Rumor has it that Red Duv is planning to keep one apprentice on full time after the summer.
You have been asked to write a report summarizing your training as a management accountant. The report will be closely looked at when deciding who will stay on with the company full time. Lucky for you, you followed directions in the training and already have your rough draft ready to polish.

The paper should contain eight (8) sections. In 1500 – 2500 words summarize the following:
1. Managerial Accounting: Define and discuss in detail managerial accounting. What is its purpose? How is it used? What are the primary responsibilities of a management accountant? Discuss some of the differences between financial accounting and managerial accounting. Summarize the ethical standards of management accountants.
2. Job Order Costing: Define job order costing. Compare and contrast job order costing with process costing. Trace the flow of costs through a job order costing system. Discuss manufacturing overhead and how it is applied. Why is the manufacturing overhead account adjusted at the end of the period?
3. Process Order Costing: Define Process order costing. Trace the flow of costs through a process order costing system. Explain the concept and calculation of equivalent units of production. Discuss the production report as a decision making tool.
4. Cost Management Systems: Analyze the process of assigning and allocating costs. Discuss the development of an activity-based costing system and how activity based costing system and how activity based management is used in decision making. Compare and contrast Just-In-Time and Quality Management Systems.
5. Cost-Volume-Profit Analysis: Analyze cost behavior in relation to changes in volume. Define contribution margin and its use in computing operating income. Discuss cost-volume-profit (CVP) analysis and how it is used as a decision tool.
6. Variable Costing: Compare and contrast variable costing with absorption costing, highlighting the differences between operating income. Discuss the use of variable costing for decision making in a manufacturing company and a service company.
7. Decision Making: Discuss how relevant information is used to make short-term decisions and how pricing affects short-term decisions. Explain the concept of capital budgeting and detail the capital budgeting techniques used to make decisions. This includes, the payback method, the accounting rate of return method, and the discounted cash flow method.
8. Budgets and Standard Costing: Evaluate the different types of budgets and discuss how operating and financial budgets are prepared for a manufacturing company. Discuss the use of budgets and standard costs to control business activities. Explain how standard costs are used to determine variances.

Identify financial or management accounting tools that could facilitate the organisation in dealing with those risks and trends.

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Role: As the newly assigned Chief Financial Officer (CFO) of (choose ONE organisation):
a. SOBEY’s (Empire)
b. AIR CANADA
c. UBER
d. Amazon
You are drafting the year end report to the Chief Executive Officer (CEO). The organisation is running a study to track
and highlight the most significant long‐term risks and trends worldwide that are likely to affect the organisation with a
view to devising strategies to deal with those changes in the most effective way. With a view to assessing the accounting
input in these strategies, you were asked to identify financial or management accounting tools that could facilitate the
organisation in dealing with those risks and trends.
The report shall include four key parts.
1. The first part shall include a brief overview of the key long‐term risks and trends identified for the organisation that you chose. For each risk/trend you shall provide a justification for choosing it and comment on its importance to the organisation.
2. The second part shall include one page theoretical diagram for each risk/trend identified in 1) that fully and accurately reflects the associations, i.e. the financial or management tools identified, the channels through which they enable each organizational learning, and the desired outcome. You may decide the level of detail and type of information to enter the diagrams so long it is in one page per risk/trend identified. The diagrams should be part of your presentation to the CEO so they shall reflect the essence of your analysis for the particular organization as fully and accurately as possible.
3. The third part of the report shall include a summary of all key points emanating from each diagram
of part 2.
4. The forth and final part of the report shall conclude the analysis and provide the CEO founded recommendations for the way forward.
Electronic file in pdf form shall be submitted.
The report should base on the materials that I provide, the reading of CMA only pages 3-14 are useful.

Prepare a max 700 word email communicating in a professional way the importance of management accounting.

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Accounting for Financial Manage Control;
Based upon a basic six month cash flow budget/ spreadsheet using the monthly income and expenditure requirements of the company.Prepare a max 700 word email communicating in a professional way the importance of management accounting using any articles you wish to support your opinion and commenting on the financial position of the company should they continue to purchase computers at the current rate.

Analyze the Financial Accounting Standards Board (FASB) conceptual framework and the benefits expected to be derived from the conceptual framework.

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Write a 5 page paper in which you:
1. Analyze the Financial Accounting Standards Board (FASB) conceptual framework and the benefits expected to be derived from the conceptual framework. Identify two weaknesses of the framework and make at least two recommendations that would enhance the conceptual framework. Provide a rationale to support your recommendations.
2. Analyze the two primary qualities of useful accounting information and give your opinion on whether you agree with the two primary qualities. Suggest to FASB one additional primary quality that would enhance accounting usefulness. Provide two examples to support your suggestion.
3. Describe the role of the Securities and Exchange Commission (SEC) and its development of the financial accounting theory and practice. Analyze the relationship between the SEC and the FASB with respect to the development and establishment of financial theory and practices. Give two recommendations that would improve the relationship between the SEC and FASB. Provide a rationale to support for your recommendations.
4. Use at least three quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as academic resources.
The specific course learning outcomes associated with this assignment is:
• Create recommendations for enhancing an accounting framework and for improving the relationship between the SEC and the FASB.

Identify key drivers of business model and competitiveness

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A 5,000 words report plus a 250 words executive summary. A report based on very detailed research into company accounts. Analyse company’s business activities – Use your own explanation of how company’s business model works (DO NOT COPY COMPANY’S STATEMENTS)
• Identify key drivers of business model and competitiveness
– Use independent data on company’s markets
– Assess future prospects for these markets
• Compile financial ratios for performance, efficiency, liquidity and solvency for company and at least three competitors
– Ratio analysis over the past five years
– Comparing these ratios – draw your own conclusions, NOT just descriptions
Structure of the Project

REPORT SUMMARY:
– equity data, company fundamentals, prospects, valuation & recommendation
• Show key data on share price & performance, valuation price & ratios and investor recommendation
• Two to three statements which explain your forecasts for the company’s revenue, income and cash flow
• Key economic and market forces driving company’s prospects
• How this translates into valuation, target price & recommendation

1) INTRODUCTION:
• Summarise company’s activities and business model
– What does it sell? Where? To whom? With what competitive advantage? • Main markets served by company – by region, product, customer type
• Typical features which MIGHT affect your company:
– Demographics, social trends, consumer behaviour, fashion, changes in global trading patterns, environmental issues
• Avoid lengthy history and descriptions
• Use short, sharp summary of what drives this business)
– Company’s business model – which markets drive its revenue and profit?
2) SECTOR REVIEW:
– the market forces driving demand, supply, competition, prices, costs & margins in the sectors which contribute most of the company’s revenue and profits
• Sector comments must be relevant to company’s operations
• Identify two to four key market forces driving demand
• Understand how competition works in sector
• Reach clear conclusion on likely future directions
• Reach clear conclusions about specific market forces
• Support those conclusions with statistical evidence
• Do NOT simply download economic and sector data without explaining how it affects sector prospects

3) COMPANY ASSESSMENT:
– company’s competitive position in sector, past performance relative to peers (using financial ratio analysis), key drivers of future trading, conclusion on their likely direction and impact on financial forecasts
• Assess historic performance and future prospects
• Analyse 5-year trends in financial ratios:
– Has it improved or deteriorated in recent years?
– Have there been any volatile movements – what may have caused them?
– Is the company reliable in delivering sustained earnings growth?
– Or is it poised for recovery from a low point? Or unlikely to recover?
• Compare company’s performance with sector peers
– Has it performed better or worse than its peers?
– Are its finances stronger or weaker than its peers?
– Has it been operated more efficient than its peers?

4) FORECASTING:
– translate trading assumptions into sales, costs, income & cash flow forecasts
FORECASTS FOR:
• Revenue from demand, price & competitor analysis
• Expenses from assessment of supplier pressures and movement in operating overheads
• Net income & earnings from tax, debt & interest rates
• Dividend from earnings and payout ratios
• Cash flow from working capital and depreciation accruals
• Balance sheet from accruals, retained earnings and cash flow

5) VALUATION:
– translate forecasts into DCF & DDM valuations relative to share price, and Price Multiples relative to peers
Absolute Valuation Methods / Intrinsic Value
• Convert dividend forecast into DDM
• Convert free cash flow forecast into DCF
Relative Valuation Methods / Price Multiples
• First-year forecast of sales, earnings & book value of equity
• Calculate ratios of:
– P/E
– P/Sales
– P/Book
• Compare with peer company ratios

6) RECOMENDATION AND CONCLUSION:
• If wide variations (>15%) between these valuations, check assumptions
– does cash flow over/understate by using too high/low depreciation charge?
– does dividends over/understate by using too high/low payout ratio?
• If after re-examination values still widely divergent, explain why
• Compare each valuation with current share price to identify Buy (valuation > share price) or a Sell
(share price > valuation)

Criteria for marking the reports
USE OF DATA
• How well have you used data to compile an INDEPENDENT view of company prospects, accessing websites of:
– Company & its competitors
– Industry bodies
– Government statistics and reports
– Financial and economic reports
LOGIC, ARGUMENT & FINANCIAL FORECASTS
• Logical argument to support assessment of company prospects
• Accuracy and clear exposition of company’s financial forecasts
• Independent thinking to link research data to conclusion
• Presentation of argument, financial forecasts and valuation

1-4 added materials is past 5 years statements of BT group
5-9 is reading list for this report

Describe the three responsibility centers and give an example of each from your work.

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Decentralized businesses can have three responsibility centers that must be evaluated differently because of their functions.

Describe the three responsibility centers and give an example of each from your work.
Give an explanation about how each is evaluated.
Tell us why you would prefer to work in a centralized or decentralized organization.
Discuss which type of responsibility center you would prefer to manage and why.

Identify key drivers of business model and competitiveness

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A 5,000 words report plus a 250 words executive summary. A report based on very detailed research into company accounts. Analyse company’s business activities – Use your own explanation of how company’s business model works (DO NOT COPY COMPANY’S STATEMENTS)
• Identify key drivers of business model and competitiveness
– Use independent data on company’s markets
– Assess future prospects for these markets
• Compile financial ratios for performance, efficiency, liquidity and solvency for company and at least three competitors
– Ratio analysis over the past five years
– Comparing these ratios – draw your own conclusions, NOT just descriptions
Structure of the Project

REPORT SUMMARY:
– equity data, company fundamentals, prospects, valuation & recommendation
• Show key data on share price & performance, valuation price & ratios and investor recommendation
• Two to three statements which explain your forecasts for the company’s revenue, income and cash flow
• Key economic and market forces driving company’s prospects
• How this translates into valuation, target price & recommendation

1) INTRODUCTION:
• Summarise company’s activities and business model
– What does it sell? Where? To whom? With what competitive advantage? • Main markets served by company – by region, product, customer type
• Typical features which MIGHT affect your company:
– Demographics, social trends, consumer behaviour, fashion, changes in global trading patterns, environmental issues
• Avoid lengthy history and descriptions
• Use short, sharp summary of what drives this business)
– Company’s business model – which markets drive its revenue and profit?
2) SECTOR REVIEW:
– the market forces driving demand, supply, competition, prices, costs & margins in the sectors which contribute most of the company’s revenue and profits
• Sector comments must be relevant to company’s operations
• Identify two to four key market forces driving demand
• Understand how competition works in sector
• Reach clear conclusion on likely future directions
• Reach clear conclusions about specific market forces
• Support those conclusions with statistical evidence
• Do NOT simply download economic and sector data without explaining how it affects sector prospects

3) COMPANY ASSESSMENT:
– company’s competitive position in sector, past performance relative to peers (using financial ratio analysis), key drivers of future trading, conclusion on their likely direction and impact on financial forecasts
• Assess historic performance and future prospects
• Analyse 5-year trends in financial ratios:
– Has it improved or deteriorated in recent years?
– Have there been any volatile movements – what may have caused them?
– Is the company reliable in delivering sustained earnings growth?
– Or is it poised for recovery from a low point? Or unlikely to recover?
• Compare company’s performance with sector peers
– Has it performed better or worse than its peers?
– Are its finances stronger or weaker than its peers?
– Has it been operated more efficient than its peers?

4) FORECASTING:
– translate trading assumptions into sales, costs, income & cash flow forecasts
FORECASTS FOR:
• Revenue from demand, price & competitor analysis
• Expenses from assessment of supplier pressures and movement in operating overheads
• Net income & earnings from tax, debt & interest rates
• Dividend from earnings and payout ratios
• Cash flow from working capital and depreciation accruals
• Balance sheet from accruals, retained earnings and cash flow

5) VALUATION:
– translate forecasts into DCF & DDM valuations relative to share price, and Price Multiples relative to peers
Absolute Valuation Methods / Intrinsic Value
• Convert dividend forecast into DDM
• Convert free cash flow forecast into DCF
Relative Valuation Methods / Price Multiples
• First-year forecast of sales, earnings & book value of equity
• Calculate ratios of:
– P/E
– P/Sales
– P/Book
• Compare with peer company ratios

6) RECOMENDATION AND CONCLUSION:
• If wide variations (>15%) between these valuations, check assumptions
– does cash flow over/understate by using too high/low depreciation charge?
– does dividends over/understate by using too high/low payout ratio?
• If after re-examination values still widely divergent, explain why
• Compare each valuation with current share price to identify Buy (valuation > share price) or a Sell
(share price > valuation)

Criteria for marking the reports
USE OF DATA
• How well have you used data to compile an INDEPENDENT view of company prospects, accessing websites of:
– Company & its competitors
– Industry bodies
– Government statistics and reports
– Financial and economic reports
LOGIC, ARGUMENT & FINANCIAL FORECASTS
• Logical argument to support assessment of company prospects
• Accuracy and clear exposition of company’s financial forecasts
• Independent thinking to link research data to conclusion
• Presentation of argument, financial forecasts and valuation