In addition, the balance has been outstanding for several months. Assess acceptable audit risk as high, medium, or low considering the items you identified in requirement a. The company is privately held, but there is a large amount of debt, therefore the financial statements will be used fairly extensively.
This could result in the loan being called unless a waiver of the loan covenant is granted. Your team has been assigned the responsibility of auditing the acquisition and payment cycle and one related balance sheet account, accounts payable.
Assume that Pinnacle Manufacturing took a complete physical inventory at December 31,and the auditor concluded that recorded inventory reflects all inventory on hand at the balance sheet date.
Valuation, Allocation and Accuracy The auditor should read the footnotes and other information related to accounts payable and purchases to determine whether the information is accurate and presented at the appropriate amounts.
Also, management is considering selling the Machine-Tech division, which has the potential to result in extensive use of the statements by the buyers. Custom Products About Pinnacle Pinnacle Manufacturing specializes in tanks and containers for the environmental, industrial, and energy markets.
Several of the controls should satisfy multiple objectives. List those relationships, ratios, and trends that you believe will provide useful information about the overall reasonableness of accounts payable.
Pinnacle Manufacturing Part II a. The following are furnished as background information: A 35, gallon storage tank system, which can be fed by plant water or rainwater collected from the facility roof, is connected to a permanent, roof-mounted piping system that feeds tanks and containers to be tested.
During a meeting with the facilities director, you learn that the board of directors has decided to raise a significant amount of debt to finance the construction of a new manufacturing plant for the Solar-Electro division. During a meeting with the facilities director, you learn that the board of directors has decided to raise a significant amount of debt to finance the construction of a new manufacturing plant for the Solar-Electro division.
There is a potential related party transaction, which could affect the valuation of the transaction and may require disclosure as a related party transaction. No effect on inherent risk 2. For effective internal control, the functions of approving the payment and signing the checks should be segregated.
The company is privately held, but there is a large amount of debt, therefore the financial statements will be used fairly extensively.
Use each of the three factors in the text to categorize your conclusions: The solar power engine business revolves around constantly changing technology, thus making it inherently more risky than other businesses, with a better chance of subsequent bankruptcy.
For each inherent risk, identify the account or accounts and the relevant audit objectives that may be affected. Item 4 in the planning phase indicates plans for additional debt financing. Question INTEGRATED CASE APPLICATION—PINNACLE MANUFACTURING: PART VII.
(Objectives, ) Parts III, V, and VI of this case study dealt with obtaining an understanding of internal control and assessing control risk for transactions. ACCT Group Project Part 4 Solution. ) a., b., c., and d. PINNACLE MANUFACTURING―Part IV # 1.
a. Key Internal Control Segregation of the purchasing 5/5(1). INTEGRATED CASE APPLICATION — PINNACLE MANUFACTURING: PART II. (Objectives) In Part I of the case, you performed preliminary analytical procedures for Pinnacle (pp.
–). The purpose of Part II is to identify factors influencing risks and the%(1).
Answer to INTEGRATED CASE APPLICATION — PINNACLE MANUFACTURING: PART II (Objectives) In Part I of the case, you pe %(1). SOLUTIONS TO INTEGRATED CASE APPLICATIONS—PINNACLE MANUFACTURING Chapter 6 Integrated Case Application—Pinnacle Manufacturing: Part I a.
Amounts (in thousands) Pinnacle Manufacturing Company Income Statement - Welburn Division For the Year Ended December 31 Pinnacle Manufacturing Case Question. 2 pages words. This is a preview content. A premier membership is required to view the full essay. View Full Essay.
4. We chose four special interest situations for Pinnacle Manufacturing that pose a problem. with inherent risk. Such situations are explained below.Pinnacle manufacturing case