Pinnacle Manufacturing Part II a.
External confirmations are sent to confirm the existence. Inventory balance has also significantly increased it should be insured through stock count working and test of details purchases subsequently. NRV working should be checked too. Increase in liabilities is checked through agreement with the banks and verification from the bank statements.
It is also important to check that company is in compliance with all the compulsory covenants of the banks.
In case of noncompliance with the compulsory covenants and non-payments of interest and principal on time may cause the company unable to fulfill all current liabilities. As the company is relying overly on debt and also planning to get more debt then financial statements are very important for the lenders.
In order to sell Machine tech, financial statements would be extensively relied upon by potential buyers. As indicated in Item 7 in the planning activities, several restrictive covenants were identified. Two requirements of the covenants were to keep the current ratio above 2.
As calculated in Part 1, the current ratio has fallen from 2. This could result the loan to be called.
When management lacks integrity, there is a greater likelihood that material errors and irregularities may occur in the accounting process from which the financial statements are prepared. Item 6 in the planning phase, indicates that there is a high turnover especially at the higher-level position in the internal audit departments.
This turnover may be intentional and increases the risk of fraudulent financial reporting. For example, the internal auditors who were at a higher position were fired because the auditor found out about the managements financial interest in the entity.
Therefore, the acceptable audit risk for this project will be medium. Since Pinnacle Manufacturing is a risky client; the auditors have to perform more checking of the documents, account, etc.
Therefore, the audit risk for the project will be low. The auditors would like to be sure that all the accounts are properly checked and verified. As the requirements state to keep the current ratio above 2. To maintain these requirements, the management can either increase or decrease current assets to satisfy the criteria thus the auditors would do more checking on these.
Since the management is changing its internal audit personnel, new members would take time to understand the audit environment and lack experience. So the audit risk would be low since the auditors would not rely on management representation, as the figures would be high or misrepresented.
There is significant risk that inventory is overstated and this cause misstatement of Inventory; Item 3: Miss Classification of Computerized Equipment that will cause misstatement in manufacturing equipment Item 5: Accounts receivable are overstated causing misstatements in Receivable.The only Constant is Change Today more than ever, manufacturing operations benefit from facilities that provide flexiblity and scalability.
Pinnacle has developed flexible infrastructure solutions to support the Lean environment. PINNACLE MANUFACTURING―Part IV. Uploaded by.
Cherrie Ann DeHere. Download with Google Download with Facebook or download with email. PINNACLE MANUFACTURING―Part IV. Download. PINNACLE MANUFACTURING―Part IV. Uploaded by. Cherrie Ann DeHere. Original Work please INTEGRATED CASE APPLICATION –PINNACLE MANUFACTURING: PART II (Objectives , ) In Part I of the case, you performed preliminary analytical procedures for Pinnacle (pp.
–). The purpose of Part II is to identify factors influencing risks and the relationship of risks to audit evidence. Pinnacle Manufacturing Pinnacle % Change Ratio Common-Size Income Statement Account Receivable Part G Inventory Part G Short / Current Long-term debt Part G Part A.
-Total Liabilitues have substantially increased - Could be due in part to increased inventory on hand Part B. Free Essays on Pinnacle Manufacturing Part 1 for students. Use our papers to help you with yours 1 - Analytical Procedures Problem Devry University ACCT January 24, ANALYTICAL PROCEDURES—RATIO ANALYSIS FORM The auditor can use this form to document the performance and evaluation of ratio analysis in connection with analytical procedures performed in an audit.
Integrated Case Application—Pinnacle Manufacturing: Part I a. Amounts (in thousands) Ratios Current assets 44, 36, 36, Current liabilities 25, 17, 16, Pinnacle Manufacturing Company Income Statement - All Divisions For the Year Ended December 31 Dollar Value % of Sales Dollar. Read this Business Case Study and over 89, other research documents. Pinnacle Manufacturing Part II. a. Identif specific considerations from part I and II of the cas that affect your assessments of engagement risk and. PINNACLE MANUFACTURING: PART II. (Objectives , ) In Part I of the case, you performed preliminary analytical procedures for Pinnacle (pp. –). The purpose of Part II is to identify factors influencing risks and the. relationship of %(1).