Background PiesRUs is a family run company located in Barrie, Ontario engaged in the manufacture and...

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Background Pies"R"Us is a family run company located in Barrie, Ontario engaged in the manufacture and sale of various baked goods, primarily apple pies. The company has a modern 110,000 square foot bakery (manufacturing facility). With 200 dedicated full-time employees, it has been making pies for customers across North America and beyond since 1975. Apples used by Pies"R"Us in their recipes are harvested (picked) between August and mid-October each year ("the Crop"). Pies"R"Us does not have their own orchards and instead rely on local growers to source apples for their pies. Purchases of the 2022 Crop have been made by mid-October. Pies"R"Us does not have sufficient cold-storage utilities in their own manufacturing facility, so a significant portion of the 2022 Crop was stored on the growers' orchards. You, CPA, have been assigned to the audit for the year ended October 31, 2022. You will be responsible for dealing with inventory (where professional judgment is required), including assessing appropriateness of valuation of apple inventory and analysis of write down, if necessary. Information available: An extract of the trial balance as at October 31, 2022 is as shown below: Account Description Inventory related GL 3-10100 INV - Finished Goods 3-10200 INV - Apples * 3-10201 INV - Apples, Storage 3-10300 INV - Raw Materials and supplies *** 2022 $ $ $ 1,101,758 $ 1,969,750 $ 5,706,391 2021 1,684,156 $ 1,923,187 950,727 $ 337,616 $ 675,232 $ 2,305,023 $ 5,241,058 2022 Crop located at Pies"R"Us cold-storage warehouse ** 2021 and 2022 Crop located at cold-storage warehouses at the growers' orchards Includes non-apple raw materials (e.g., butter, flour, sugar, etc.) and packaging materials Account Other balances Multiple GL a/cs Multiple GL a/cs 6-10100 Description Year Grower Storage Location Inventory (Bins) Weight Total Weight Rate Bakery sales Cost of sales (COS) Apple COS 2022 Inventory Cost Weight (per weigh bills) Difference Inventory (per Weigh Bills) $ 57,364,595 $ 31,649,484 $ 1,728,062 2021 While performing the inventory count, management provided you with an electronic copy of its "Apple Inventory Listing" (the Listing) as at October 31, 2022. Refer to 05 DAIS Dataset Module 02 Assurance HANDOUT (Dataset) for listing of closing inventory of apple inventory as at October 31, 2022. The Dataset provided contains the following fields: $ 60,057,422 $ 34,420,096 $ 1,920,641 Year in which the Crop was harvested Name of the orchard owner Details of Bin/ Room # where apples are stored Number of bins in the Storage room Estimated lbs. of apples per bin Total weight (in lbs.) for all bins Price per lbs. Total cost of apple inventory Weight of apples (in lbs.) per weight bill (included with bill of sale) Difference between calculated weight per bin and Weigh Bills Total cost of apple inventory based on weigh bills Required: Part 1: Preliminary Analytical Review (during risk assessment stage) Consider the preliminary financial information provided above and perform preliminary analytical review procedures in accordance with CAS 315.14 (b) [See Readings section below]. a) As a result of these procedures, identify unusual patterns/ ratios/trends related to apple inventory that may have audit implications. b) Management provided you with the budget/ forecast for fiscal 2023 and you noted that projected revenue of baked goods for fiscal 2023 is $60,519,648. Using the inter-relationships and ratios calculated in Part 1a) above, determine if there are any additional issues related to apple inventory. Note: The outcome of analysis performed in Part 1a) and b) will be used to document results of risk assessment procedures in Part 3 of this Module. A Pies"R"Us 1 2 Year ended October 31, 2022 3 Apple inventory 4 Year B 5 6 7 2021 8 2021 9 2021 10 2021 11 2021 12 2021 13 2021 14 2021 15 2022 16 2022 17 2022 18 2022 19 2022 20 2022 21 2022 22 2022 23 2022 24 2022 25 2022 26 2022 27 2022 28 2022 29 2022 30 2022 31 2022 32 2022 33 2022 34 Grower Morraine Morraine Morraine Morraine Morraine Morraine Wallis Wallis Oakridges Oakridges Oakridges Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Bordell Bordell Bordell Bordell Bordell Bordell Bordell Bordell Storage Location Bayview - Room 1 Bayview - Room 1 Bayview - Room 1 Bayview - Room 2 Bayview - Room 2 Bayview - Room 2 Main Storage Hall Main Storage Hall Oakridges Farms Room 1 Oakridges Farms Room 1 Oakridges Farms Room 1 Clearwater - Room 1 Clearwater - Room 1 Clearwater - Room 1 Clearwater - Room 2 Clearwater - Room 2 Clearwater - Room 2 Clearwater - Room 2 Clearwater - Room 2 Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres D Inventory (bins) 67 220 80 280 74 153 138 78 442 183 424 56 301 60 125 64 192 120 61 342 297 34 157 47 52 196 139 4,382 E Weight (lbs per bin) 852 844 860 860 860 860 860 860 863 868 860 860 860 860 860 860 860 860 860 856 864 866 862 856 851 846 872 Total Weight (lbs) 57,084 185,680 68,800 240,800 63,640 131,580 118,680 67,080 381,446 158,844 364,640 48,160 258,860 51,600 107,500 55,040 165,120 103,200 52,460 292,752 256,608 29,444 135,334 40,232 44,252 165,816 121,208 3,765,860 PBC Rate (Price/ lbs) $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.30 $0.30 $0.30 $ 0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $ 0.30 $0.30 $ 0.30 $0.30 $0.30 $ 0.30 $0.30 $0.30 $ LA LA LA $ $ Inventory Cost (Amount) $ $ $ A LA LA LA 69 69 69 $ $ $ $ $ $ GAGA $ $ $ $ $ $ LA LA LA LA LA $ $ $ H $ $ $ $ 32,250 16,512 49,536 30,960 15,738 87,826 76,982 I 15,413 57,120 50,134 185,680 69,540 241,952 69,320 150,740 18,576 65,016 17,183 35,527 32,044 18,112 114,434 174,905 381,559 47,653 158,847 109,392 365,002 14,448 49,205 77,658 293,040 15,480 51,260 8,833 40,600 12,070 13,276 49,745 Weight (per weigh bills) 491,550 J Difference Weight (lbs) Inventory per weigh bills -36 $ 0 $ -740 $ -1,152 $ -5,680 $ -19,160 $ $ 10,855 $ -113 $ -362 $ -1,045 $ -34,180 $ 340 $ $ $ $ 47,224 114,468 -3 $ 47,654 109,501 14,762 87,912 15,378 K ,,, $ -8,230 $ 147,465 $ $ $ $ $ $ 15,422 50,134 18,776 65,327 18,716 40,700 LA LA $ 36,362 1,085,317 329 $ 325,595 1,101,758 3,825,037 -59,177 $1,119,033 Background Pies"R"Us is a family run company located in Barrie, Ontario engaged in the manufacture and sale of various baked goods, primarily apple pies. The company has a modern 110,000 square foot bakery (manufacturing facility). With 200 dedicated full-time employees, it has been making pies for customers across North America and beyond since 1975. Apples used by Pies"R"Us in their recipes are harvested (picked) between August and mid-October each year ("the Crop"). Pies"R"Us does not have their own orchards and instead rely on local growers to source apples for their pies. Purchases of the 2022 Crop have been made by mid-October. Pies"R"Us does not have sufficient cold-storage utilities in their own manufacturing facility, so a significant portion of the 2022 Crop was stored on the growers' orchards. You, CPA, have been assigned to the audit for the year ended October 31, 2022. You will be responsible for dealing with inventory (where professional judgment is required), including assessing appropriateness of valuation of apple inventory and analysis of write down, if necessary. Information available: An extract of the trial balance as at October 31, 2022 is as shown below: Account Description Inventory related GL 3-10100 INV - Finished Goods 3-10200 INV - Apples * 3-10201 INV - Apples, Storage 3-10300 INV - Raw Materials and supplies *** 2022 $ $ $ 1,101,758 $ 1,969,750 $ 5,706,391 2021 1,684,156 $ 1,923,187 950,727 $ 337,616 $ 675,232 $ 2,305,023 $ 5,241,058 2022 Crop located at Pies"R"Us cold-storage warehouse ** 2021 and 2022 Crop located at cold-storage warehouses at the growers' orchards Includes non-apple raw materials (e.g., butter, flour, sugar, etc.) and packaging materials Account Other balances Multiple GL a/cs Multiple GL a/cs 6-10100 Description Year Grower Storage Location Inventory (Bins) Weight Total Weight Rate Bakery sales Cost of sales (COS) Apple COS 2022 Inventory Cost Weight (per weigh bills) Difference Inventory (per Weigh Bills) $ 57,364,595 $ 31,649,484 $ 1,728,062 2021 While performing the inventory count, management provided you with an electronic copy of its "Apple Inventory Listing" (the Listing) as at October 31, 2022. Refer to 05 DAIS Dataset Module 02 Assurance HANDOUT (Dataset) for listing of closing inventory of apple inventory as at October 31, 2022. The Dataset provided contains the following fields: $ 60,057,422 $ 34,420,096 $ 1,920,641 Year in which the Crop was harvested Name of the orchard owner Details of Bin/ Room # where apples are stored Number of bins in the Storage room Estimated lbs. of apples per bin Total weight (in lbs.) for all bins Price per lbs. Total cost of apple inventory Weight of apples (in lbs.) per weight bill (included with bill of sale) Difference between calculated weight per bin and Weigh Bills Total cost of apple inventory based on weigh bills Required: Part 1: Preliminary Analytical Review (during risk assessment stage) Consider the preliminary financial information provided above and perform preliminary analytical review procedures in accordance with CAS 315.14 (b) [See Readings section below]. a) As a result of these procedures, identify unusual patterns/ ratios/trends related to apple inventory that may have audit implications. b) Management provided you with the budget/ forecast for fiscal 2023 and you noted that projected revenue of baked goods for fiscal 2023 is $60,519,648. Using the inter-relationships and ratios calculated in Part 1a) above, determine if there are any additional issues related to apple inventory. Note: The outcome of analysis performed in Part 1a) and b) will be used to document results of risk assessment procedures in Part 3 of this Module. A Pies"R"Us 1 2 Year ended October 31, 2022 3 Apple inventory 4 Year B 5 6 7 2021 8 2021 9 2021 10 2021 11 2021 12 2021 13 2021 14 2021 15 2022 16 2022 17 2022 18 2022 19 2022 20 2022 21 2022 22 2022 23 2022 24 2022 25 2022 26 2022 27 2022 28 2022 29 2022 30 2022 31 2022 32 2022 33 2022 34 Grower Morraine Morraine Morraine Morraine Morraine Morraine Wallis Wallis Oakridges Oakridges Oakridges Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Grey Fox Bordell Bordell Bordell Bordell Bordell Bordell Bordell Bordell Storage Location Bayview - Room 1 Bayview - Room 1 Bayview - Room 1 Bayview - Room 2 Bayview - Room 2 Bayview - Room 2 Main Storage Hall Main Storage Hall Oakridges Farms Room 1 Oakridges Farms Room 1 Oakridges Farms Room 1 Clearwater - Room 1 Clearwater - Room 1 Clearwater - Room 1 Clearwater - Room 2 Clearwater - Room 2 Clearwater - Room 2 Clearwater - Room 2 Clearwater - Room 2 Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres Bordell Acres D Inventory (bins) 67 220 80 280 74 153 138 78 442 183 424 56 301 60 125 64 192 120 61 342 297 34 157 47 52 196 139 4,382 E Weight (lbs per bin) 852 844 860 860 860 860 860 860 863 868 860 860 860 860 860 860 860 860 860 856 864 866 862 856 851 846 872 Total Weight (lbs) 57,084 185,680 68,800 240,800 63,640 131,580 118,680 67,080 381,446 158,844 364,640 48,160 258,860 51,600 107,500 55,040 165,120 103,200 52,460 292,752 256,608 29,444 135,334 40,232 44,252 165,816 121,208 3,765,860 PBC Rate (Price/ lbs) $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.27 $ 0.30 $0.30 $0.30 $ 0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $ 0.30 $0.30 $ 0.30 $0.30 $0.30 $ 0.30 $0.30 $0.30 $ LA LA LA $ $ Inventory Cost (Amount) $ $ $ A LA LA LA 69 69 69 $ $ $ $ $ $ GAGA $ $ $ $ $ $ LA LA LA LA LA $ $ $ H $ $ $ $ 32,250 16,512 49,536 30,960 15,738 87,826 76,982 I 15,413 57,120 50,134 185,680 69,540 241,952 69,320 150,740 18,576 65,016 17,183 35,527 32,044 18,112 114,434 174,905 381,559 47,653 158,847 109,392 365,002 14,448 49,205 77,658 293,040 15,480 51,260 8,833 40,600 12,070 13,276 49,745 Weight (per weigh bills) 491,550 J Difference Weight (lbs) Inventory per weigh bills -36 $ 0 $ -740 $ -1,152 $ -5,680 $ -19,160 $ $ 10,855 $ -113 $ -362 $ -1,045 $ -34,180 $ 340 $ $ $ $ 47,224 114,468 -3 $ 47,654 109,501 14,762 87,912 15,378 K ,,, $ -8,230 $ 147,465 $ $ $ $ $ $ 15,422 50,134 18,776 65,327 18,716 40,700 LA LA $ 36,362 1,085,317 329 $ 325,595 1,101,758 3,825,037 -59,177 $1,119,033

Answer rating: 100% (QA)

Detailed Explanation To analyze the financial information provided and identify any unusual patterns or trends related to apple inventory we will Compare inventory levels from 2021 to 2022 to spot sig... View the full answer