...HBSP Product Number TCG 5 rP os t THE CRIMSON PRESS CURRICULUM CENTER THE CRIMSON GROUP, INC. Lakeside Hospital A hospital just can’t afford to operate a department at 50 percent capacity. If we average 20 dialysis patients, it costs us $425 per treatment, and we’re only paid $250. If a department can’t cover its costs, including a fair share of overhead, it isn’t self-sufficient and I don’t think we should carry it. op yo Peter Lawrence, M.D., Director of Specialty Services at Lakeside Hospital, was addressing James Newell, M.D., Chief Nephrologist of Lakeside’s Renal Division, concerning a change in Medicare’s payment policies for hemodialysis treatments. Recently, Medicare had begun paying independent dialysis clinics for standard dialysis treatments, and the change in policy had caused patient volume in Lakeside’s dialysis unit to decrease to about 50 percent of capacity, producing a corresponding increase in per-treatment costs. By February of the current fiscal year, Dr. Lawrence and Lakeside’s Medical Director were considering closing the hospital’s dialysis unit. Dr. Newell, who had been Chief Nephrologist since he’d helped establish the unit, was opposed to closing it. Although he was impressed by the quality of care that independent centers offered, he was convinced that Lakeside’s unit was necessary for providing back-up and emergency services for the outpatient centers, as well as for treatment for some of the hospital’s seriously ill inpatients. Furthermore...
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...Exercises Exercise 1 Following his discussion with Rogers, Andrews talked briefly with Carole Mitchell concerning the warehouse expansion. She indicated that Art Heyman had already prepared an analysis of the repairs and Maintenance account (see Exhibit 9-4). In addition, based on the debits to the Warehouse account (see Exhibit 9-5) he had located the invoices substantiating the capitalized transactions (see Exhibit 9-7) while reviewing the invoices received by Lakeside subsequent to the end of 2012. Perform the necessary steps to test the warehouse account (#111-1) and document your procedures on an audit document similar to the one in Exhibit 9-4. Indicate and prepare on the audit document any proposed correcting entries that are needed to ensure fair presentation of this financial information. [Case 9-1.doc] Lakeside Company Tests of Buildings - Warehouse/Office December 31, 2012 Audit document No. W-3 Prepared by: KB Reviewed by: RG Reviewed by: JG Description | Amount | | Audit Procedures | Balance per books - Beg. of Year | $248,400 | | | Additions: | | Invoice No. | | Grade land and pour foundation | 21,800 | 3145 | > # | October- Warehouse Construction | 16,900 | 3189 | > # | November- Warehouse Construction | 25,300 | 3214 | > # | Roofing Repair and Warehouse Construction | 14,600 | 3228 | > # | Disposals: | | Cash Rec. No. | | | | | | | | | | | | | | Balance per books - End of Year | | |...
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...The Scientist Bill Gates And Microsoft Program Bill Gates was born in Seyatel Washington in 28 th October in 19855. Child bill grew up in a family with along history. He was a bright member of the local organizations and banks. Bill's intelligence and ambitions has appeared in an earlier time on his life he was clever at maths and science. So, his father interred him to lakeside school which knawn by its own outstanding academic. In this school Bill Knew the computer for the first time. In the spring, of 1968, the school decided to boy a computers. Computers in this time ware large and expensive. The school has been unable to buy a computer. So, it decided together some money from father as a donations. From that moment he become found of computer. He was student in the eighth grand at that time. He spent a lot of his time in the computer room at school. He was busy with writing programs and apply them to the point that he neglected his homework and absent from school in some cases. After that. Bill and his friend interested in computers and can make many programs like bisak he realized that the age of personal computer will began. Although Bill gates was clever and dose his best with computers, he faced great difficults in dealing with staff. He was impatient and faces of people quickly. Bill be lives that if you're smart and know how to use your inelegance, you can a chive the impossible. It is worth mention that Bill Gates chose Egypt as an Arab Country...
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...The Lakeside Company Date: January 2013 To: Dan Cline From: Wallace Andrews, Manager Subject: Transactions Regarding The Lakeside Company’s Seventh Store In response to your request for information on partnerships seeking to help animal welfare, I have found information regarding efforts within our community. In Delaware, recent legislation has been put into place, backed by organizations seeking to improve the treatment of animals, relating to the dangers humans pose on pets as well as the dangers these pets pose to humans. In addition, new organizations are pushing to spread awareness on how to protect your pets. These efforts affect Delaware pet owners as well as the First State Animal Center and SPCA, the statewide organization seeking to prevent cruelty and suffering to animals as well as the fair adoption of pets into homes. Each piece of legislation targets a need of the FSAC and is supported by partnerships. First, a bill has been passed to promote the management of shelter standards, the humane killing of animals in shelters. Through ongoing collaborations with the governor’s office and the General Delaware Assembly, shelters are now required to evaluate animals in depth before deciding whether or not to euthanize. Also, shelters throughout Delaware are being forced to eliminate inhumane gas shelters if euthanasia is chosen. Second, a bill was passed “relating to the training and certification of Animal Control Officers and Animal Cruelty Investigators...
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...Audit Procedures: Reviewed receiving reports for completeness and authorization. See comments A and B. Verified that each item listed was properly recorded in inventory purchases journal. Traced to vendor invoice and purchase requisition in Treasurer’s Office. Examined purchase requisition for agreement with receiving report as to quantity and description of goods received. All agreed except C. See also comment D. Examined purchase requisition for evidence that proper company official approved items and quantities. Thomas’ and Rogers’ signatures or initials present in all cases except E. Examined vendor invoice for agreement with receiving report and purchase requisition as to quantity and description of goods received. All agreed except C. Examined vendor invoice for evidence that company employees verify prices, extensions, and footings. Markings or initials present in all cases except F. Compared invoice prices with Master Price list. All agree except H, I, and J. Traced invoice to canceled check and matched dollar amounts, recalculating any applicable discount. All agreed except J. See also comment K. Comments: A. Receiving reports have no place for Vendor name. Most merchandise is received from Cypress Products, but if office supplies or other necessary material is received at the receiving dock, the report should have a place to indicate an alternate vendor than Cypress Products. B. Receiving report #3926 not on file. Used Purchase...
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...Audit Lakeside Case October 13, 2015 1. An engagement letter is an essential aspect in establishing an understanding between the client and the audit firm. This documentation is required in order to identify the objective and scope of the audit, outline the specific responsibilities of management and the audit firm, identify inherent limitation of the audit, ascertain the applicable financial reporting framework, and the expected forms Engagement letters are necessary in settling disputes between auditor and management. When management signs the written engagement letter, they are entered into an executor contract with the auditor. In the engagement letter presented by Abernethy and Chapman, the audit firm clearly outlined the following responsibilities for Lakeside management: 1) The financial Statements 2) Establish and Maintain internal controls over financial reports 3) Identify and ensure compliance with laws and regulations applicable to its activities 4) Make all financial records and related information available to auditors 5) At the end of the engagement, providing a representation letter Abernethy and Chapman outlined the following responsibilities for the auditor: 1) Audit financial statements for purpose of establishing an opinion on the financial position, results of operations, and cash flows in compliance with GAAP. 2) Obtain reasonable, not absolute, assurance that financial statements are free of material misstatements, in...
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...in this audit with Lakeside Company, in order from one to seven, with one being the most important to the audit: 1. There appears to be a going concern for the industry that the Lakeside company is in. In 2005, Lakeside was in trouble, but has somewhat made a turnaround in 2010 and 2011; however, there are companies similar to Lakeside that are still going out of business. Within the last six months, and audio equipment company within the Richmond area went bankrupt. Also, while Roger’s distributorship business is growing, it seems that the remainder of his business is stagnant. In addition, it appears that Rogers has strayed from his original retail store operation into a new product market that may not be strong enough to support. With a failed product line in connecting with a weak market and continuous expansion on the basis of debt, this is a concern for the audit as an entity’s ability to remain a going concern and the potential for management fraud to inflate earnings and growth. 2. Rogers’ refusal to comply with his previous auditors request to report the companies sixth store with a write down in value to assess impairment, because Rogers believed no impairment existed. This argument led to the issue of a qualified opinion. The sixth store is located in an unsuccessful shopping center and has been underperforming. The company has not even come close to breaking-even and the failures of the shopping center make it appear uncertain if Lakeside could continue as...
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...The Lakeside Company Case Studies in Auditing Twelfth Edition John M. Trussel Dalton State College J. Douglas Frazer Millersville University Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editor in Chief: Donna Battista Acquisitions Editor: Stephanie Wall Editorial Project Manager: Christina Rumbaugh Senior Managing Editor: Cynthia Zonneveld Production Project Manager: Carol O'Rourke Senior Operations Supervisor: Diane Peirano Printer/Binder: BindRite Graphics, Robbinsville Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text. Copyright © 2012, 2008, 2005, 2003 by Pearson Education, Inc., publishing Prentice Hall. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290...
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...Lakeside Hospital A hospital just can’t afford to operate a department at 50 percent capacity. If we average 20 dialysis pa- tients, it costs us $425 per treatment, and we’re only paid $250. If a department can’t cover its costs, includ- ing a fair share of overhead, it isn’t self-sufficient and I don’t think we should carry it. Peter Lawrence, M.D., Director of Specialty Services at Lakeside Hospital, was addressing James Newell, M.D., Chief Nephrologist of Lakeside’s Renal Division, concerning a change in Medicare’s payment policies for hemodialysis treatments. Recently, Medicare had begun paying independent dialysis clinics for standard dialysis treatments, and the change in policy had caused patient volume in Lakeside’s dialysis unit to decrease to about 50 percent of capacity, producing a corresponding increase in per-treatment costs. By February of the current fiscal year, Dr. Lawrence and Lakeside’s Medical Director were considering closing the hospital’s dialysis unit. Dr. Newell, who had been Chief Nephrologist since he’d helped establish the unit, was op- posed to closing it. Although he was impressed by the quality of care that independent centers of- fered, he was convinced that Lakeside’s unit was necessary for providing back-up and emergency services for the outpatient centers, as well as for treatment for some of the hospital’s seriously ill inpatients. Furthermore, although the unit could not achieve the low costs of the independent cen- ters, he disagreed...
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...UNIVERSITY OF ILLINOIS MEMORANDUM TO: Dr. Newell FROM: DATE: February 14, 2013 SUBJECT: Lakeside Hospital Renal Dialysis Unit Analysis Introduction Dr. Peter Lawrence noted that as a result of an alteration in Medicare’s payment policies for hemodialysis treatments, the Renal Dialysis Unit in Lakeside Hospital will be terminated unless he can show that the unit covers its costs in addition to an adequate portion of the overhead costs. In the memorandum, I will explain the pros and cons of retaining the dialysis unit, an assessment of the results of the CVP analysis, and offer you recommendations. Renal Dialysis Unit Mission The mission of the Renal Dialysis Division is to provide hemodialysis treatment for the increasing number of patients with chronic kidney disease. Because Medicare’s policy has recently changed, the number of patients in the renal dialysis unit has dropped to fifty percent; as a result, the unit has been only providing 3120 treatments to patients with end-stage renal disease. In dialysis, part of the patient’s blood is cleaned as it circulates in an artificial kidney machine. Advantages And Disadvantages of Retaining The Dialysis Unit Based on the analysis, if the dialysis unit continues to operate as it is currently or even consolidates patients to a single shift, the unit will continue treating its patients with chronic kidney disease. If Lakeside Hospital retains the unit, this is advantageous because the patients with end-stage renal disease...
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...DISCUSSION QUESTIONS 1. Both the company’s bank and Lakeside owners would require an independent CPA firm to avoid any biases and upkeep the independence in auditing. 2. Under generally accepted auditing standards the audit is to be performed by a person or persons having adequate training which is interpreted to mean ‘technically qualified and experienced in those industries in which their clients are engaged” (Arens, Elder, Beasley, & Hogan, 2010, p. 35). This interpretation is based on recent court cases. With that information in mind this engagement should not be accepted. Care industry is significantly different than electronics so I would believe an audit in each industry would be considerably different. The auditor should certainly discuss the lack of expertise and possibly consider having a contract or new hired personnel to assist with such an audit. 3. Provided the employees truly have an understanding of how to achieve a profit sharing bonus, auditors may be concerned with the decision making of the employees. employees loyalty would be torn between providing the most independent unbiased information for the customer and the information that will provide their family with additional income. 4. A firm does face independence issues with auditing the output of systems the designed and installed regardless if the company is publicly traded or not. As the creator of the system the company may be biased as to how well the system works. The assumption that they created...
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...Lakeside Auditing Case Study Case 1 Prepared by: January 27, 2011 1: An independent annual audit can provide credibility to information, and this could be very helpful for decision making. In this specific case, the owner of the Lakeside requires an independent CPA firm to perform an annual audit because the owner wants to show the public a “good-look” of its financial statements; since he would like to receive more capital by making his company public. In addition, good-looking financial statements of the company could provide good credit from the bank. To the lakeside company, the owner would like to provide audited financial statement to the bank to obtain the loan and receive the best possible interest rate. On the other hand, a decision by a bank loan officer about whether to make a loan to Lakeside Company and what rate of interest adequately compensates the bank for the level of risk assumed depends on an independent auditing report about lakeside’s financial reports. An auditing report about the company is reliable for the bank; it can significantly reduce the level of information risk. If the loan officer has assurance from the auditors that the company’s financial statements are prepared in accordance with GAAP, he or she will have more confidence in his or her assessment of business risk. By reducing information risk, the audit reduces the overall risk to the bank. 2: According to GAAS, the auditor must obtain a sufficient understanding of the entity and...
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...Auditing Cases AUDITING PROCEDURES AND AUDITING DOCUMENTATION: TESTING THE INVENTORY PURCHASING SYSTEM Art Heyman is employed as a staff auditor with the independent accounting firm of Abernethy and Chapman. For the first two weeks of December 2012, Heyman is asined to the Lakeside Company examination. During this period, he is to perform a number of testing procedures designed by Carole Mitchell, in-charge auditor on the engagement. Heyman recalled that several parts of the initial risk brainstorming involved inventory and merchandise purchases. At the present time, Heyman is beginning to analyze the transactions that occur in the client's merchandise procurement system. Within this testing, he is especially interested in determining the extent to which employees comply with control procedures while carrying out various required activities. This evaluation will influence the assessment of control risk and therefore, the nature, timing, and extent of substantive tests to be performed by the firm in this area. Lakeside leases a perpetual inventory record accounting system from DATA Processing System of Richmond, an outside service organization. The initial entries are made by the Controller's division of Lakeside, and on a weekly basis the transactions are uploaded through DATA Processing Systems' website. Reports are then generated, and one copy of the current inventory balances goes to Edward Thomas, who is responsible for acquiring merchandise, while a second list is conveyed...
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...DISCUSSION 1. A company profit-sharing arrangement is a matter of auditor concern because it provides an incentive for employees to generate artificially high income figures. These individuals can receive direct financial benefits from the manipulation of reported earnings. This potential problem is even more of a concern in the Lakeside engagement because controls are weak and each store is geographically isolated from the oversight provided by the administrative offices. 2. This case describes the payroll system used by the Lakeside Company. Tests of controls are designed by the auditor to verify that specific control features identified as possible strengths are operating effectively. A sample of such tests would include the following: a. Compare the payroll records produced by Sarah Sweet to time tickets completed by hourly employees noting agreement as to hours worked; b. Verify that time tickets have been appropriately authorized; c. Recalculate salaried employees' monthly pay and compare to the payroll records; d. d. Recalculate salesmen's commissions and compare to payroll records; e. Recalculate payroll deductions based on government payroll tables and the data listed on the W-4 form filed by each employee. Compare these deductions to the company's payroll records; f. Recompute Lakeside's payroll taxes and compare to total reported balance; g. Verify mathematical accuracy of net wage figures (salary less deductions); h. Foot the...
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...Case 6 - Exercise 2 Lakeside Company Inventory Purchases and Cash Disbursements Transactions December 31, 2006 Audit document No. N-3 Prepared by: AM 5/23/05 Reviewed by: Reviewed by: Date Vendor Purchase Requisition Number Receiving Report Number Invoice Number Check Number Audit Procedures 8/20/06 Cypress Products 6702 3918 711 3091 8/21/06 Cypress Products 6703 3919 802 3121 F 8/24/06 Cypress Products 6705 3920 991 3164 F 8/27/06 Cypress Products 6704 3921 1261 3203 E H L 8/28/06 Cypress Products 6706 3922 1313 3251 D 9/2/06 Cypress Products 6707 3923 1406 3310 G 9/3/06 Cypress Products 6708 3924 1510 3345 I 9/7/06 Cypress Products 6710 3925 1616 3397 F B Cypress Products 6709 3926 1691 3425 B 9/14/06 Cypress Products 6711 3927 1812 3451 C C 9/16/06 Cypress Products 6712 3928 2072 3471 F J 9/16/06 Cypress Products 6713 3929 2149 3510 E Audit Objectives: To verify that all received merchandise was properly ordered and recorded and is for legitimate business purpose. To verify that expenses and assets are properly valued and classified. To verify that merchandise orders are handled properly and cash disbursements occur accurately for these orders. Scope: a) Population- All received merchandise. b) Sample- Judgmental. Selected 12 receipts of merchandise from...
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