...Solutions for the Biltrite Bicycles Inc. Case Module I - Assessment of Inherent Risk..............................................................3 Module II – PRELIMINARY ASSESSMENT OF CONTROL RISK BASED ON AN UNDERSTANDING OF THE DESIGN OF CONTROLS ................17 Module III - Control Testing: Sales Processing................................................29 Module IV - PPS Sampling: Factory Equipment Additions............................31 Module V - Accounts Receivable Aging Analysis..............................................35 Module VI - Sales and Purchases Cutoff Tests..................................................42 Module VII - Search for Unrecorded Liabilities...............................................47 Module VIII - Dallas Dollar Bank Reconciliation.............................................49 Module IX- Analysis of Interbank Transfers....................................................52 Module X - Analysis of Marketable Securities..................................................54 Module XI - Plant Asset Additions and Disposals.............................................57 Module XII - Estimated Liability for Product Warranty.................................61 Module XIII - Mortgage Note Payable and Note Payable to Bank Two.........63 Module XIV - Working Trial Balance................................................................66 Module XV - Audit Report..................................................................................80 ...
Words: 23506 - Pages: 95
...Biltrite bicycles inc (CASE STUDY) By Amardeep Bains Course No. ACC 650M (Auditing Principles) Submitted: 05 Feb, 2012 Module I: Assessment of Inherent Risk Requirement 1. Biltrite bicycles Inc. was incorporated in 1970 and since then it has successfully added many bikes to its production line. The company has experienced steady growth in sales and profitability of all product lines from the date of its incorporation. The following strengths in the organizations structure can be attributed to this success. The company follows segregation of duties in the accounts and the finance department. The audit staff consists of well experienced and trained personnel. The CEO is aware of the importance of risk assessment procedures and is in the process of establishing of risk assessment team. The description shows adequate separation within the CBIS function, i.e. systems analysis and programming are separate from data processing and control. There are areas where the reporting procedures are very strong and carried out very efficiently. The weaknesses consist of the dominant role played by the CEO, Mr. Trevor Lawton who is very aggressive and wants that the staff should focus on what he thinks is important. His philosophy is that the financial statements should look good. The controller of the company was at one time an employee of the auditing firm...
Words: 3316 - Pages: 14
...Module 3 1.In going through the plan it is my observation that the plan lacks in testing some areas, specifically the sales revenue and accounts receivable. Via info from the previous module we know there is no pre numbering for bills of lading and no other method to which these are accounted for. There are several things that could result from this weakness. We can conclude that there may be discrepancies in items shipped and items billed to customers. As well because of a lack of numerical reference, sampling can have a lack of effectiveness. () 2 & 3. (Refer to Attached Excel Document) 4. Upon analyzing the sampling results, it could be said that when it comes to cases of missing bills of lading there is significant evidence provided to conclude that because of the outlying beyond the allowable deviation, there has to be an unallowable amount of billings without shipment. I think these results would lead a skeptical auditor to conclude that there is possible inflation of earnings via conjured up sales recordings. () Module 4 1.The objective of performing this test is to determine if the factory equipment accounts are materially unstable or overstated from misclassification of certain items pertaining to regular maintenance. The unit being sampled here would be the all of the amounts debited to the factory equipment accounts (ie. the dollar amount). The population would be the total debits of $12,600,000, this is what is left after ($89860000-$772600000). By...
Words: 5151 - Pages: 21
...BILTRITE BICYCLES INC. CASE STUDY 2 MODULE II 1. Biltrite’s strengths and weaknesses in the internal control Assertion Sale Processing Flowchart: Weakness A. The office was uninformed about the credit approval - Valuation B. Missing customer information and product validation - Valuation C. Invoices were mailed before shipping the goods - Existence And does not matched with bill of lading D. Bill of ladings are not pre numbered - Completeness Strength Good internal control for receivables aging analysis and Follow up of delinquent accounts. Cash Receipts Processing Flowchart: Weakness E. Unrestricted customer check endorsement - Valuation F. Unable to edit and apply discounts and correct net amount - Valuation Purchases and Accounts Payable: Weakness G. Need approval for the prepared voucher for proper -Valuation Account distribution Strengths H. Verifies details on goods received with the receiving report I. Matching control tape with purchase summary for the processed invoices Payment Processing Flowchart: Strengths J. Matching the checks with the documents, amount and remittance details K. Checks are reviewed before signing for approval. L. Cancelled checks/documents to avoid duplication. M. Mailed check directly to vendors after signing the checks. Biltrite’s strengths and weaknesses in the internal control Assertion Payroll Processing Flowchart: Weakness ...
Words: 1620 - Pages: 7
...CHAPTER 10 Auditing Revenue and Related Accounts 1 Explain the concept of accounting cycles and their impact on audit approaches, and identify the accounts in the revenue cycle. 2 Discuss the importance of proper revenue recognition and the characteristics of revenuerelated fraud. 3 Describe the major types of fraud and misstatements that have occurred in the revenue accounts. 4 Describe how to use analytical procedures to identify possible misstatements in the revenue cycle. 5 Assess inherent and control risk regarding revenue cycle accounts. 6 Use audit procedures to test the effectiveness of controls in the revenue cycle. 7 Link the auditor’s control risk assessment to the development of substantive tests of accounts in the revenue cycle. 8 Describe the factors that influence the effectiveness and efficiency of audits of account balances. 9 Apply auditing concepts to test revenue. 10 Apply auditing concepts to test accounts receivable. 11 Describe fraud indicators in the revenue cycle and related audit procedures. 12 Evaluate the adequacy of a client’s allowance for doubtful accounts. Th om so n LEARNING OBJECTIVES Le ar ni ng ™ The overriding objective of this textbook is to build a foundation to analyze current professional issues and adapt audit approaches to business and economic complexities. Through studying this chapter, you will be able to: CHAPTER OVERVIEW This chapter illustrates the audit concepts developed in Chapters...
Words: 33572 - Pages: 135
...Ecole des Hautes Etudes en Sciences Sociales Ann´e 2007 e Num´ro attribu´ par la biblioth`que e e e ———————————— Essais en Finance d’Entreprise THESE POUR LE DOCTORAT EN SCIENCES ECONOMIQUES DE L’ECOLE DES HAUTES ETUDES EN SCIENCES SOCIALES Pr´sent´e et soutenue publiquement par e e David SRAER le 29 Juin 2007 Directeur de th`se e M. Jean Tirole Directeur d’Etudes ` l’E.H.E.S.S. a JURY M. Denis Gromb, Mme. Ulrike Malmendier , M. Brunos Biais, M. Jacques Cr´mer, e Professeur, London Business School (Rapporteur) Assistant Professeur, Universit´ de Californie, Berkeley (Rapporteur) e Directeur de Recherche au C.N.R.S., Universit´ de Toulouse 1 e Directeur de Recherche au C.N.R.S., Universit´ de Toulouse 1 e Remerciements J’ai ` l’´gard de Jean Tirole un dette incommensurable : pour l’accueil chaleureux dont il m’a fait b´n´ficier ` a e e e a chacune de mes venues ` Toulouse, pour l’incroyable richesse des discussions que nous avons pu avoir tout au long a du d´veloppement de cette th`se, pour le soutien qu’il m’a toujours apport´ et pour l’extraordinaire qualit´ de ses e e e e conseils scientifiques, je luis suis infiniment gr´. e David Thesmar m’a fait d´couvrir ce qu’´tait r´ellement la recherche en ´conomie et surtout, a su m’ouvrir les e e e e yeux sur ce qu’´tait la bonne recherche en ´conomie. Sans lui, et ` de tr`s nombreux ´gards, cette th`se n’existerait e e a e e e pas. Sa cr´ativit´, son enthousiasme, sa curiosit´ tout comme son amiti´ ont ´t´...
Words: 79791 - Pages: 320
