Identify type of risks impacted (inherent vs control risk) Why they are risks? Discuss five risk factors
Fantastic news! We've Found the answer you've been seeking!
Question:
Identify type of risks impacted (inherent vs control risk)
Why they are risks?
Discuss five risk factors to support your analysis?
Transcribed Image Text:
Totally Yours staff consists of Julie, Karen, who is another full-time stylist, and three part time employees. There is another full-time esthetician, Emily, who operates a spa within Totally Yours, but she is not on the Totally Yours payroll as her business is a separate entity from Totally Yours. Emily has her own esthetics practice, Nails Art, located within the TYI premises. Nails Art is owned 100% by Emily. The last few times I have been in the salon, I noticed it doesn't seem like Emily and Julie are getting along well. Carrie and Kim are new graduates of a local hair school whom Julie hired in March of this year. Julie has often scheduled them together some nights since they seem to be really good friends and get along well. They are keen to work as much as possible to pay down their large student loans. Julie is hoping they bring in a lot of new clients to TYI. So far so good as they seem to have a lot of friends in the salon! Julie always used to answer the phones and book appointments herself, but Grace was hired two months ago to take on this role. When clients book an appointment, it is entered into a master schedule. This is maintained electronically so a historical record is available for each client. Julie has been so impressed with Grace that she has started letting her do the bank deposits and ring in clients when their services are complete. Sometimes when Grace is busy, stylists will ring in their clients themselves. Everyone has access to ringing in clients to ensure that customers are not kept waiting when their service is complete. Emily will often ring in Totally Yours clients for services and products sold as her clientele is still growing and she often is not busy. Sometimes Grace will ring in Nail Art clients as well when Emily is busy. TYI is seeking a loan to modify her storefront location. TYI has a three-year lease. Julie is not keen on the rent TYI is being charged at a rate of 5% of sales in addition to the $1,000 fixed amount per month. The lessor provided an upfront incentive of three months of free rent given that there have been some robberies in other locations in the same strip mall. TYI has a line of credit with covenants tied to working capital ratios. The bank requires the audited financial statements to be provided within two months of the year end. A breach of the covenants means that the line of credit will become payable on demand. Julie does not have sufficient cash flows to repay the loan if the bank were to call it. Julie purchases 85% of her products from "Maritime Supply" a local beauty supply shop. This includes products for sale as well for use during client services. Julie provides a 10% commission to employees who make a sale of a product and shows this separately on each employee's pay stub. Totally Yours staff consists of Julie, Karen, who is another full-time stylist, and three part time employees. There is another full-time esthetician, Emily, who operates a spa within Totally Yours, but she is not on the Totally Yours payroll as her business is a separate entity from Totally Yours. Emily has her own esthetics practice, Nails Art, located within the TYI premises. Nails Art is owned 100% by Emily. The last few times I have been in the salon, I noticed it doesn't seem like Emily and Julie are getting along well. Carrie and Kim are new graduates of a local hair school whom Julie hired in March of this year. Julie has often scheduled them together some nights since they seem to be really good friends and get along well. They are keen to work as much as possible to pay down their large student loans. Julie is hoping they bring in a lot of new clients to TYI. So far so good as they seem to have a lot of friends in the salon! Julie always used to answer the phones and book appointments herself, but Grace was hired two months ago to take on this role. When clients book an appointment, it is entered into a master schedule. This is maintained electronically so a historical record is available for each client. Julie has been so impressed with Grace that she has started letting her do the bank deposits and ring in clients when their services are complete. Sometimes when Grace is busy, stylists will ring in their clients themselves. Everyone has access to ringing in clients to ensure that customers are not kept waiting when their service is complete. Emily will often ring in Totally Yours clients for services and products sold as her clientele is still growing and she often is not busy. Sometimes Grace will ring in Nail Art clients as well when Emily is busy. TYI is seeking a loan to modify her storefront location. TYI has a three-year lease. Julie is not keen on the rent TYI is being charged at a rate of 5% of sales in addition to the $1,000 fixed amount per month. The lessor provided an upfront incentive of three months of free rent given that there have been some robberies in other locations in the same strip mall. TYI has a line of credit with covenants tied to working capital ratios. The bank requires the audited financial statements to be provided within two months of the year end. A breach of the covenants means that the line of credit will become payable on demand. Julie does not have sufficient cash flows to repay the loan if the bank were to call it. Julie purchases 85% of her products from "Maritime Supply" a local beauty supply shop. This includes products for sale as well for use during client services. Julie provides a 10% commission to employees who make a sale of a product and shows this separately on each employee's pay stub.
Expert Answer:
Answer rating: 100% (QA)
Inherent risks are risks that exist regardless of the effectiveness of internal controls while control risks are risks that arise due to the ineffecti... View the full answer
Related Book For
Auditing The Art And Science Of Assurance Engagements
ISBN: 9780136692089
15th Canadian Edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan, Joanne C. Jones
Posted Date:
Students also viewed these accounting questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Show that in the limit ??x ?? 0 and ??t ?? 0, the difference Equation (3.12) is equivalent to the differential Equation (2.5). GIVENThe difference equation for one-dimensional transient...
-
In Figure a, a 20?? resistor is connected to a battery. Figure b shows the increase of thermal energy Eth in the resistor as a function of time t. The vertical scale is set by Eth = 2.50mJ, and the...
-
Find the natural frequencies for torsional vibration of a fixed-fixed shaft.
-
The accounting records of DVD Sales, Inc., include these accounts: Compute DVD's net cash provided by (used for) operating activities during March. Use the indirect method. Cash Accounts Receivable...
-
Consider the following two mutually exclusive alternatives: Alternative B may be replaced with an identical item every 20 years at the same $150 cost and will have the same $24 uniform annual...
-
While there are no specific best practices used to measure your submission, legibility and clarity of your diagram are components of formatting(please draw the diagram and fill Cockburn use case...
-
Indicate the effect that each of the following conditions will have on a firm's average variable cost curve and its average cost curve. a. The movement of a brokerage firms administrative offices...
-
Given the set F= {A-B, AB-C, ACBD} of functional dependencies, prove the following dependencies by using the Armstrong axioms. (1) A-ABC (2) AD-BCD 2. Consider a relation schema R(X, Y, Z) with the...
-
Go to Canva or another design website. Look at the available slide templates and choose two that appeal to you. Why are you drawn to these examples? What about the colors or format do you like? What...
-
The major Java Bean used to handle or process messages is called . a. Session Bean b. Notification Bean c. Message-Driven Bean d. Manager Bean
-
The most popular Java GUI containers include: . a. JFrame Form, JDialog Form, JPanel Form b. JPanel Form, JPlugins Form, JCanvas Form c. JPanel Form, JMaven Form, PHP Form d. JFrame Form, JField...
-
The Apache NetBeans Platform is a broad Swing-based framework on which you can base large desktop applications. (True/False)
-
For an upcoming presentation, prepare an engaging opening. Try something original and creative but consider the audience carefully so you dont lose credibility by trying to capture attention in a way...
-
1) Find all eigenvalues and eigenvectors of the following matrices 1 0 0 21-2 1 1 (a) A (b) A (c) A = = = 3 -3 3/4 -5 3 2 4 202 4 2 3 In all cases, complete the following data (A) (- the spectrum of...
-
When you weigh yourself on good old terra firma (solid ground), your weight is 142 lb. In an elevator your apparent weight is 121 lb. What are the direction and magnitude of the elevator's...
-
In your audit of Aviary Industries for calendar year 2020 you found a number of matters that you believe represent possible adjustments to the companys books. These matters are described below....
-
Lesley Stopps, a public accountant, is the auditor for Great Western Lumber Company Ltd., a wholesale wood milling company. Lesley calculated the gross margin for three product lines and compared it...
-
Distinguish between the existence and completeness assertions. State the effect on the financial statements (overstatement or understatement) of a violation of each assertion with regard to accounts...
-
Determine the slope at \(C\) and displacement at \(B\). \(E I\) is constant. A a W B
-
The W10 \(\times 15\) cantilever beam is made of A-36 steel and is subjected to the loading shown. Determine the slope and displacement at its end \(B\). A 3 kip/ft -6 ft -6 ft - B
-
The W14 \(\times 30\) cantilever beam is made of A-36 steel and is subjected to the loading shown. Determine the slope and displacement at its end \(B\). 2 kip/ft A 6 ft 6 ft. B 30 kip-ft
Study smarter with the SolutionInn App