Solved by verified expert :Integrated Case Application—Pinnacle
Manufacturing
Background Material|Part 1—Problem 8-40 (Due Week 3, 40 points)|Part 2—Problem 9-37 (Due Week 4, 40 points)|Part 3—Problem 10-43 (Due Week 4, 40
points)|Part 4—Problem 11-34 (Due Week 5, 40
points)|Part 5—Problem 14-34 (Due Week 5, 40
points)|Part 6—Problem 15-35 (Due Week 6, 40
points)|Part 7—Problem 16-35 (Due Week 7, 40
points)|Grading Rubrics|Best Practices
A critical skill
required of auditors is teamwork. Auditors do not work individually; firms
assign teams of auditors to work on an audit or a portion of an audit. Learning
the dynamics of teamwork should, therefore, be part of an auditing course. Many
students dislike team projects because they feel, in many instances, that the
workload is not shared, or that extra time is spent in team meetings.
Personality clashes with team members also make for an unpleasant experience.
In our online environment, many of these concerns are addressed. Meetings are
conducted in a discussion area, in the same manner that our discussions are.
This creates an audit trail, where the instructor can see the group’s
interaction and the role that each member plays. There are no required meeting
times, so the project can be worked around each member’s schedule. Finally,
each student will complete an evaluation of the work of other team members, as
part of the assessment. You were assigned to your group through a random selection
process.
Use the
appropriate Dropboxes to submit your portion of the group’s project, along
with the confidential evaluation report. All documents are in Doc Sharing in
the pull down menu course project files. Submit your assignment to the Dropbox
located on the silver tab at the top of this page. For instructions on how to
use the Dropbox , read these
See the Syllabus section
“Due Dates for Assignments & Exams” for due date information.
Background Material
The Case Study is
presented at the end of seven chapters in your textbook: Chapters 8, 9, 10, 11,
14, 15, and 16. Your group is to complete all seven parts.
The worksheets
for the group project can be downloaded atthis link .
A meeting room has been
set up for your group. Please go to the team meeting area. You should use this
meeting area to discuss strategy, delegate assignments, discuss class material
and its application, and to help the team solve problems. Individual participation
is required, and the meeting room helps establish evidence of each member’s
participation. The meeting room is monitored by the instructor, but the
instructor is not the discussion leader. Each group will decide how the
workload is to be divided between the members. You may wish to designate one
member as a lead person for the overall project, designate a lead person for
each part of the project, or use any method that the group decides on. Here is
anarticlethat may assist you in conducting your group
project.
Part 1—Problem 8-40 (Due Week 3, 40 points)
Part 1 requires your
group to calculate and analyze ratios. To assist you, our firm uses a standard
worksheet for common ratios; you can download a copyhere . The problem directs you to the
publisher’s website; however, you may download the required files from the link
above. You will also prepare a common-size income statement, using the
information from the Excel worksheet named pinnacle financials, found in the
zip file that you downloaded. You are asked to estimate potential
misstatements, and your group should discuss methods for this estimate and the accounts
that are at risk.
Part 2—Problem 9-37 (Due Week 4, 40 points)
Part 2 presents
information that will help your team assess the business and audit risks
associated with your audit. This evidence, together with your analysis from
Part 1, will be the basis of your written risk assessment. You may wish to use
a risk matrix similar to Figure 9-6 as part of your presentation. The risk
assessment should be presented as a memo to file. The memo should identify the
users of the financial statement and their reliance on the financial
statements, the likelihood of the client having financial difficulties, and the
integrity of management. Next, your memo will establish the acceptable audit
risk as low, medium, or high, with a justification for your selection. The memo
should then address the inherent risk and the associated account(s) with each
of the 11 situations discussed in the problem.
Part 3—Problem 10-43 (Due Week 4, 40 points)
Back to Top
This part of the project
requires your team to review the internal control flowchart presented in the
case to identify the existing internal controls over the acquisition and
payment cycle. You will then identify weaknesses, if any, in those controls and
assess the control risks that the weaknesses present. Your team will then
complete the control risk matrices workpaper included in the zip file
downloaded from the above link. A model of this worksheet is presented on page
309 for a sales cycle audit.
Part 4—Problem 11-34 (Due Week 5, 40 points)In this part, you will
have an opportunity to participate in brainstorming related to fraud as part of
the audit planning stage. The purpose of this part is to identify risks and to
address those risks in the audit.
You will begin by using
the fraud triangle and information from Parts 1 through 3 to identify
incentives and pressures, opportunities, and attitudes and rationalizations.
Then you will identify risks and accounts that will be affected. You will then
look at revenue and identify at least two ways that fraud can happen and how
you would find it in the audit.
You will finish up by
looking back to Parts 1 and 2 and identifying fraud risks related to all areas
covered there.
Part 5—Problem 14-34 (Due Week 5, 40 points)
This task requires your
team to plan a phase of an audit around the internal controls that you
identified in Part 3. You will use the worksheet contained in the zip file
designated for this problem. For each control, you will complete columns for
the transaction-related audit objective, list a test of controls, and a
substantive test of transaction. Next, your team will list a substantive test
of transaction for each of the audit-related objectives for the acquisition and
cash disbursement cycle. These tests may or may not be included in the final
program. At this step, we are matching tests to audit objectives, and our final
selection of tests will be based on a final risk analysis. Your team will
select those tests that will best meet the planned audit risk.
Part 6—Problem 15-35 (Due Week 6, 40 points)
Here, your team will
complete the sampling data sheet included in the zip file. The planned audit
variables are judgmental and should be decided upon as a team in your meeting
area. For random selection using Excel, the command to select numbers randomly
from the population is
=RANDBETWEEN(4614, 31612)
The command for
selecting the random number can be entered directly onto the spreadsheet, or
can be selected from the function menu (math and trig) under the insert menu.
It may be necessary to add the analysis tool pack to access the RANDBETWEEN
function.
The final step is to use
the data presented in D to complete the actual resultssection
of the acquisition schedule. Note: You will not be completing the cash
disbursement section of actual results.
Part 7—Problem 16-35 (Due Week 7, 40 points)
Your final tasks of the
project begin with the performance of analytical procedures in accounts
payable. The team will next design tests of details of balances in accounts
payable. The problem then presents your team with the results of testing in
Sections D, E, and F. You will use this information to complete the worksheet
for this problem included in the zip file. You will calculate an estimated
error. Again, the team must make a judgement on the amount to include as
an estimate of sampling error. To conclude the problem, the
team comes to a conclusion on the fairness of the accounts payable balance.
Grading Rubrics
Criterion
Unsatisfactory (less than 50% of points
as allocated to the criterion)
Needs Improvement (50–79% of points as
allocated to the criterion)
Meets Requirements (80–100% of points as
allocated to the criterion)
Content, analysis, application of principles and calculations
80% of total project points
Lacks analysis and application of most principles is not
correct. Most calculations are not correct
Analysis is done but the scenario is not drilled down enough to
get a perfect understanding. The application of few principles is not done
properly. Few calculations are not correct
Good analysis, proper application of principles, and correct
calculations
Spelling and grammar
10% of total project points
Spelling errors throughout the paper and most sentences are not
grammatically correct
Very few spelling and grammar errors
No spelling mistakes and grammar erros
Format and
appearance
10% of total project points
There is no apparent attempt to format for readability. It is
hard to follow or determine the answer. There is no conclusion or indication
of where to find the answer or conclusion for each requirement.
The answer to each requirement could be easily determined but
the presentation is not in an organized format and lacks suitable subtitles.
It is a well organized answer with clear indication of each
requirement and suitable subtitles wherever needed.
Best Practices
Communicate with your group by
posting to the team Discussion area provided in the course. Instructors
cannot see e-mails or IM conversations when they are grading the work.
What you post in discussion provides evidence of your participation in
completing the project.Set a schedule for project
completion that provides several days of slack time in case something goes
wrong.Always have more than one
member of a team working on each part of the project. Teams that try to
divide up the work rarely end with a good project.Select a team leader for the
entire term, or select team leaders for each part.
Select alternate team
leaders in case the team leader for the unit is unable to perform their duties.
