Arin Pate, CPA, is scheduled to work on the integrated audits of two client companies in the
Question:
a. Jacoh Industries is a manufacturer of medical imaging equipment. Although Jacoh’s equipment is distributed worldwide, it operates at a single location. The equipment is promoted through sales teams and sales are accepted through an online ordering system. There is a significant investment in inventories, and internal control in this area is strong. In fact, Arin’s firm has never had any significant audit differences or disagreements with the client. Within the past year, however, a new competitor has entered the market and Jacoh is experiencing a decline in sales volume. Although the company’s income statement still shows a slight profit, cash flow challenges are now prevalent. Jacoh, however, has not suffered as much as several other competitors who are reporting losses for the first time.
b. Morton Baxx publishes a monthly fashion magazine. Subscription revenues and many of the advertising revenues are deferred. Most subscriptions are sold on an annual basis, but advertising contracts range from one month to one year. Publishing costs are typically recorded in the period that they are incurred. Morton Baxx’s internal controls have been effective in the past.
Required:
In order to minimize audit risks on each of these audit engagements, what audit areas should Arin emphasize?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Auditing and Assurance Services Understanding the Integrated Audit
ISBN: 978-0471726340
1st edition
Authors: Karen L. Hooks
Question Posted: