BUSA 424 10.4 Case Southeast shoe Distributor, Inc.pdf - 10.4 Case Southeast Shoe Distributor Inc Group 3 Eddie Yang Jesse Jiang Michael Noyes Shannon

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Unformatted text preview: 10.4 Case Southeast Shoe Distributor, Inc Group 3 Eddie Yang Jesse Jiang Michael Noyes Shannon Coley Introduction - Southeast Shoe Distributor(SSD) Founder - Stewart Green and Paul Williams (10 years) SSD - A distributor who buys men's, women's, and children's shoes and buys and resells them to small and medium-sized retail stores Basic strategy - to obtain a broad selection of designer-label and name-brand footwear at low prices to resell to small one-location retail stores Keeping cost of footwear low by : 1) Purchasing large block of production over-runs, over-orders, and last season’s stock with discounted price 2) Sourcing in season name brand footwear from factories(Brazil, Italy, and Spain) 3) Negotiating favorable price with manufacturers Brand footwear - Amalfi, Clarks, Dexter, Fila, Naturalizer, and Rock port Warehouse located - Atlanta, Georgia Last year Net sale = $ 7,311,214 (Strong in 2nd and 4th calendar-year quarter/ Weaker in 1st calendar-year) Background SSD is required to have an audit of its annual financial statements to fulfill requirements of loan agreements with financial institutions. (Process of completing the audit for the Fiscal 2014 financial statements in accordance with these professional standards) Jorge Hernandez(audit senior), reviewed SSD policies and procedures related to acquisitions and cash disbursements and prepared the enclosed flowcharts and planned control risk matrix. As a result of this process, Jorge developed the enclosed audit program (audit schedules E 1-1 and E 1-2). The general ledger accounts related to purchasing and cash disbursement activities ● Inventory Purchases ● Purchase Discounts ● Purchase Returns and Allowances ● Freight In ● Administrative Expenses ● Warehousing Expenses ● Selling Expenses ● Prepaid Assets ● Accounts Payable Our Group Strategy: 10.4 Southeast Shoe Distributor, Inc. Each member of our team ran the audit program for Analytical Procedures and Tests of Transactions to ensure multiple quality checks and mitigate any missed misstatements. Audit Program: Analytical Procedures & Tests of Transactions On page #349 in your case study book E-31: Nonstatistical Tests of Controls E-35: Nonstatistical Substantive Tests Serves as a check list and is initialed and dated when auditor deems all supporting documentation has been reviewed PROCEDURE 1 ) 5 samples to be tested - OVERVIEW Purchase Journal - List of 5 samples to be audited (35/40 already tested - No Misstatements Found) Referring to question #2 on page #348 Each Sample contains multiple documents: (Not every sample has all) -Voucher -Invoice -Purchase Order -Receiving Report Procedure 1: Sample 1) Telephone Expense-recurring service 1a- No Misstatements Found 1b- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found Relevant forms to annotate: NONE Form E-31 assumes 1h and 1i have zero deviations (pg#357) Procedure 1: Sample 2) Utilities Expense-recurring service 1a- No Misstatements Found 1b- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found Relevant forms to annotate: NONE Form E-31 assumes 1h and 1i have zero deviations (pg#357) Procedure 1: Sample 3) Office Expense 1a- No KT, No R/R 1b- No Misstatements Found 1c-No Misstatements Found 1d- No KT, No R/R 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found Relevant forms to annotate: E-31 Form E-31 assumes 1h and 1i have zero deviations (pg#357) Procedure 1: Sample 4) Inventory (part 1) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d-No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found Relevant forms to annotate: NONE Procedure 1: Sample 4) Inventory (part 2) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found Relevant Forms to annotate: NONE Form E-31 assumes 1h and 1i have zero deviations (pg#357) Procedure 1: Sample 5) Inventory (part 1) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found Relevant forms to annotate: NONE Procedure 1: Sample 5) Inventory (part 2) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found Relevant Forms to annotate: NONE PROCEDURE 4 ) 5 samples to be tested - OVERVIEW Purchase Journal - List of 5 samples to be audited (55/60 already tested - No Misstatements Found) *Purchase Journal* Referring to question #3 on page #348 Each Sample contains multiple documents: (Not every sample has all) -Voucher -Invoice -Purchase Order -Receiving Report Supporting documentation for entries on 1/21/14, 5/13/14, and 6/3/14 not given Procedure 4: Sample 1) Inventory (Part 1) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found 4a- No Misstatements Found Relevant forms to annotate: NONE Procedure 4: Sample 1) Inventory (Part 2) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 4a- No Misstatements Found Relevant Forms to annotate: NONE Procedure 4: Sample 2) Inventory (Part 1) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found 4a- No Misstatements Found Relevant forms to annotate: NONE Procedure 4: Sample 2) Inventory (Part 2) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 4a- No Misstatements Found Relevant Forms to annotate: NONE Procedure 4: Sample 3) Inventory (Part 1) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found 4a- No Misstatements Found Relevant forms to annotate: NONE Procedure 4: Sample 3) Inventory (Part 2) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 4a- No Misstatements Found Relevant Forms to annotate: NONE Procedure 4: Sample 4) Inventory (Part 1) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found 4a- No Misstatements Found Relevant forms to annotate: NONE Procedure 4: Sample 4) Inventory (Part 2) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 4a- No Misstatements Found Relevant Forms to annotate: NONE Procedure 4: Sample 5) Inventory (Part 1) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 1e- No Misstatements Found 1f- No Misstatements Found 1g- No Misstatements Found 4a- No Misstatements Found Relevant forms to annotate: NONE Procedure 4: Sample 5) Inventory (Part 2) 1a- No Misstatements Found 1b- No Misstatements Found 1c- No Misstatements Found 1d- No Misstatements Found 4a- No Misstatements Found Relevant Forms to annotate: NONE FORM E-31: Nonstatistical Tests of Controls Evaluation - Expenditure Cycle Purchases Form E-35: Nonstatistical Substantive Tests Evaluation ● No misstatements found Form E-11: Proposed Adjusting Entry Schedule (4a) No adjusting entries were needed E 1-1 Expenditure Cycle Audit Program for Analytical Procedures and Tests of Transactions Completed Audit Program Procedures initialed and dated. Question? Thank you ...
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  • Fall '17
  • Jorge Hernandez, Southeast Shoe Distributor

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