Question
Answered step-by-step

Audit Short Stories Part A

 

You, CPA, recently started working with Kelly and Partners, Chartered Professional Accountants, as a senior accountant. It is March 4, 2020, and you and your team have been working on an audit engagement for a long-time client, Jim Thortons (Jim's), a national coffee chain.

 

Jim's uses a promotion every spring whereby customers can win prizes by looking inside their empty coffee cup. The prizes range from a doughnut to a mid-sized automobile. Until recently, the promotion took place in the last quarter of Jim's fiscal year and there was no need to set up a liability at year end because the claim date coincided with the year-end date. As a result, all claims were processed prior to the statements being prepared.

 

The promotion has been so successful that Jim's has decided to expand it for an extra two months. The controller grumbled, "Clearly no one considered the accounting department in this decision, as now we need to set up a liability for claims to be settled in the next year."

 

Required:

 

identify an account level risk to be audited and develop a procedure to address that risk:

RIsk and Procedure.


Part B


Jim's ordered a significant amount of coffee beans from a new supplier partway through the year. The beans were offered at a discount and the price was too good to pass up. Upon arrival, the manager realized that the beans did not meet Jim's quality standards and could not be used in the store. Jim's has been trying to return the beans but has now accepted that this is not possible. The coffee beans will not be brewed on-site but instead will be sold to a discount coffee retailer.

 

Required:

 

identify the account level risk to be audited and develop a procedure to address that risk:

 

Risk

Procedure

Answer & Explanation
Verified Solved by verified expert
Rated Helpful
<p>ce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat</p> Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet

Unlock full access to Course Hero

Explore over 16 million step-by-step answers from our library

Subscribe to view answer

gue

amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facil

gue

cing elit.

risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, c

ng elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lo

ultrices ac magna. Fusce dui lectus, congue vel laoreet ac,

a. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dol

m ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque da

gue

ec fac

ur la

a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui

gue

cing elit.

iscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molesti

ec facilisis. Pellentesque dapibus efficitur

nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante,

o. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellent

o. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam

gue

Step-by-step explanation

et, consectetur ad

nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentes
Student reviews
100% (5 ratings)
Thorough explanation
Easy to follow
Clear formatting