Extract from the statement of profit or loss for 43 weeks to 28 April 2018 $'000...
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Extract from the statement of profit or loss for 43 weeks to 28 April 2018 $'000 Notes Revenue Box office revenue Cast album sales Major expenses Cast salaries Fixed rent Variable rent 23,908 200 3,961 540 Fixed component of rent of theatres and equipment 2,173 Variable component of rent of theatres and equipment. The variable component is calculated at 7% of box office revenue up to $15,000,000 plus 10% of revenue over $15,000,000 Advertising and publicity 3,544 In addition, you documented the following information: • Sarah, the CEO, is under significant pressure to maximise box office revenue given the show's success during its Broadway run. She believes the producers will make it difficult for her to find further work in the industry if the target is not achieved. . • In order to maintain public interest in the show, cast members are encouraged to frequent trendy bars and nightclubs after weekend performances. The bookkeeper provides the cast with cash in advance for these visits. • Due to the popularity of the show's songs, management decided to produce a cast album, which has been selling well The two lead actors are paid a small base salary plus an incentive bonus, which is based on box office revenue and their social media following, television interviews as well as public appearances. Their agent has consistently claimed that each month's calculation of the incentive bonus is incorrect • Advertising and publicity is handled under contract by ShoutOut, a firm owned by Sarah's brother. The contract was awarded without a competitive tender to avoid the time commitment associated with the tendering process. The industry average for advertising and publicity expenses is around 10% of box office revenue, with a lower percentage for shows with a proven track record. Required (a) Determine the fraud risk factors at SiS. Identify the key accounts at risk of (6 marks) material misstatement for each fraud risk factor. Extract from the statement of profit or loss for 43 weeks to 28 April 2018 $'000 Notes Revenue Box office revenue Cast album sales Major expenses Cast salaries Fixed rent Variable rent 23,908 200 3,961 540 Fixed component of rent of theatres and equipment 2,173 Variable component of rent of theatres and equipment. The variable component is calculated at 7% of box office revenue up to $15,000,000 plus 10% of revenue over $15,000,000 Advertising and publicity 3,544 In addition, you documented the following information: • Sarah, the CEO, is under significant pressure to maximise box office revenue given the show's success during its Broadway run. She believes the producers will make it difficult for her to find further work in the industry if the target is not achieved. . • In order to maintain public interest in the show, cast members are encouraged to frequent trendy bars and nightclubs after weekend performances. The bookkeeper provides the cast with cash in advance for these visits. • Due to the popularity of the show's songs, management decided to produce a cast album, which has been selling well The two lead actors are paid a small base salary plus an incentive bonus, which is based on box office revenue and their social media following, television interviews as well as public appearances. Their agent has consistently claimed that each month's calculation of the incentive bonus is incorrect • Advertising and publicity is handled under contract by ShoutOut, a firm owned by Sarah's brother. The contract was awarded without a competitive tender to avoid the time commitment associated with the tendering process. The industry average for advertising and publicity expenses is around 10% of box office revenue, with a lower percentage for shows with a proven track record. Required (a) Determine the fraud risk factors at SiS. Identify the key accounts at risk of (6 marks) material misstatement for each fraud risk factor.
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a Fraud risk factor key accounts at risk of material misstatement Material misstatement will occur i... View the full answer
Related Book For
Accounting Business Reporting For Decision Making
ISBN: 9780730363415
6th Edition
Authors: Jacqueline Birt, Keryn Chalmers, Suzanne Maloney, Albie Brooks, Judy Oliver
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