In-Class Case: October 14, 2013
Zoom SnowBoards: Audit Planning Document
Please work in groups of two.
Read the Zoom Snowboard case (on Canvas). Please stop at page 1205 …just glance through page 1206. Then, please complete the template below. This audit planning case is worth 5% of your grade. It requires you to be familiar with Chapters 6, 8 and 9.
I only need one issue per row. The information must be specific (indicating that you have read the case) and not vague/ambiguous.
While this is an “in-class case”, you may finish this in any other space other than the classroom on 10/14/2013. There will be no “lecture” on 10/14/2013.
Submission date: 10/21/2013.
Potential Issue/Flag
Financial Reporting Risk
Impacts Acceptable …show more content…

Going concern issue: Net income loss, operating at zero cash balance, current asset is too close to current liability→ if continuing the company might not be able to pay the current liability Increase risk for overstated current asset, boost up the net income to cover losses, and understated liabilities and expenses AAR can increase as risk of misstatement in Income Statement and Balance Sheet increase Overstatement of Current Assets implies assertion of accuracy, occurrence, and completeness
8. Fraud Issue: Not enough segregation of duties in Montreal office (only 5 employees: 1 divisional manager, 2 sales people, 2 shipping/receiving clerks)
Risk for fraudulent activities or theft of assets, over/under-stated sales and/or inventory
AAR can decrease as risk of misstatements on the Income Statement and Balance Sheet increases.
CR can increase as the credibility of effective internal control (segregation of duties) decreases External users may rely heavily on reported assets and Net Income. Over/under-statement of sales implies assertion of accuracy
9. Control Environment issue or Corporate Governance issue: No internal control or collections department managing aging AR
Risk for over/under-statement of AR and bad debt expense, overstated Net Income
AAR can decrease as risk of misstatements on the Income Statement and Balance Sheet increases.
CR can increase as the credibility of effective internal control (segregation of duties) decreases