An Internal Memo from OHI To TIS Assignment
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
An Internal Memo from OHI To TIS Assignment
Question Description
Tweedie Implements Limited (TIS) is owned 100% by Outdoor Holding Inc. (OHI). OHI recently hired a new VP of Finance who has instituted a new policy that all wholly-owned subsidiaries are to be audited.
To comply with this new policy, TIS has appointed Trim and Weed Chartered Professional Accountants, LLP (TW) as their auditors for the year ending March 31, 2019. This is a new audit engagement for TW. In the past TIS had a review prepared by a small independent chartered accountant. The timing of the change in policy was fortunate as the other CPA was about to retire.
You, CPA, have been assigned as the audit senior on the audit engagement for TIS. Last week, the manager on the account provided you with a summary of background information on TIS (Exhibit I) and the draft financial statements (Exhibit II). The manager has asked you to spend a week at the client to identify and analyze audit and accounting issues, review internal controls and perform some interim audit procedures.
You have been assigned a junior staff assistant to help carry out these tasks. The manager has asked you to prepare a memo documenting the audit plan and discussing the accounting and auditing issues. He will use the information in the memo as the basis for a discussion with TIS management.
The manager reminded you that the parent company, OHI, is particularly interested in internal control weaknesses and you should make sure to keep your eyes open for problems and include a discussion of weaknesses that you have noted in your memo.
It is now Thursday afternoon. You have spent most of the week gathering information (Exhibit III) and it is time to write your memo for the manager. You also need to review some working papers prepared by the staff assistant (Exhibit IV).
Required:
Prepare the memo to the manager.
EXHIBIT I
BACKGROUND INFORMATION
TIS manufactures high-efficiency lawn mowers, edge trimmers and other landscape machinery. This year, TIS expanded its product lines to include pots and other metal containers used for ornamental design in gardens.
TIS entered into a licensing agreement with English developer of the “English Mower” which uses highly efficient rechargeable power cells to run its lawn mower. TIS is hoping to manufacture and market this product in North America. TIS is required to pay a royalty of 5% of the revenue earned from the sales of the lawn mower. TIS negotiated a contract with a supplier for the power cells required for this new product.
TSI sells materials used on landscaping jobs (e.g. Sod, fertilizer, grass seed etc.) at their head-office location. Because TIS also sells directly to contractors, they like to sell these materials to provide one-stop shopping for their contractors. Because they are not in the wholesaling business for these miscellaneous items, TSI does not track the inventory for this merchandise. All goods sold at the counter are entered into the system as “Supplemental Income”.
The ordering is handed by the shipping department supervisor, who fills in a pre-authorized requisition when the supply levels get low. Because this is not their real line of business, TSI includes the cost of these items under marketing expense.
TIS is a very seasonal business with 90% of its business being earned from April to October. From November to March, staff spend time negotiating new contracts and renewing old contracts. The accounting department has a very difficult time keeping up with the billing during the busy months.
They spend the slow period trying to get caught up on the other accounting functions such as reconciliations, collections and financial statement preparations. Sales and marketing staff are also affected by the seasonality and need to work longer hours. As a result, most employees have keys to the building and know the security alarm codes to allow them to work the needed overtime when it is convenient to them.
EXHIBIT III
Information obtained to date pertaining to the audit of tis
The English Mower
TIS has entered into a contract with a major Canadian retailer to supply the retailer with 2,500 of the lawn mowers at a total contract price of $750,000. As at March 31, 2019, 1,000 of these lawn mowers had been delivered to the retailer. The remainder is to be delivered in April 2019 before the grass-cutting season begins. The retailer is required to pay TSI within 30 days of delivery of the lawn mowers. As at March 31, 2019, TSI had manufactured all of the lawn mowers required by this contract and has recognized revenue in the amount of $ 750,000 from this contract.
Cost of Sales is reported in the amount of $175 per unit or $962,500, excluding the licensing royalty. Advertising Royalty
An internal memo from OHI to TIS dated December 2018, indicated that, starting with 2019 fiscal year, an advertising royalty of ½ % of net sales would be payable by TIS to OHI. The amount was not paid or accrued in the general ledger.
Income Taxes
TIS has paid monthly income tax installments based on a schedule provided by the previous accountant. These payments have been charged to “cost of goods sold”.
Accounting Department
In addition to the controller, the accounting department is made up of two people:
¨ one person handles the billing, collection functions, cash receipts and customer service.
¨ one person handles all the cash disbursements including payroll and general ledger responsibility.
Due to the high volume of transactions and the large number of customers the two employees work very hard and long hours. They are often asked to work weekends and work minimum of 60 hours weekly during the peak periods (April – October).
There is one receptionist that answers the phone, handles some customer service issues and opens the mail daily.
EXHIBIT IV
Excerpts from working papers prepared by staff assistant
Inventory
The inventory and cost of sales had been adjusted by $25,000 to correct an error in the physical count of the lawn mowers. There appeared to be less on hand than the books indicated. The controller believes the difference could be because of counting errors made by part-time employees that helped with the inventory count.
The staff assistant noted that during the year ended March 31, 2019, TSI received 10,000 rechargeable power cells that are required for the English Mower. One power cell is used for each lawn mower. The physical inventory count performed on March 31, 2019, identified that 1,700 power cells were on hand that had not been used in the manufacture of the lawn mower and identified that 2,000 completed lawn mowers were on hand, including the lawn mowers to be delivered to the Canadian retailer.
The staff assistant was not sure what is wrong in the calculation and did not know what to do next to complete the working paper.
The staff assistant also tried to perform cut-off testing of inventory but could not complete the test. The staff assistant learned that shipping documents are to be manually numbered and dated before inventory is sent but when it is really busy the shipping department doesn’t always remember to do this. The last entry in the shipping log was a few weeks before year-end.
EXHIBIT IV (continued)
Excerpts from working papers prepared by staff assistant
Cash
Monthly bank reconciliations were not prepared for every month. The bank statements were filed in an enveloped labeled “pending”. When the accounting clerk was asked about the reconciliation process, he said that he reviews the bank statements and investigates unusual items.
When discussing the bank reconciliations with the accounting clerk, the staff assistant noted that there were some blank company cheques that were already signed. The clerk indicated that the controller signed the blank cheques as he was going to be away the following week. The clerk indicated that he made sure every night to lock these cheques in his desk drawer.
Accounts Receivable
TIS does not use the allowance method for accounts receivable. All uncollectible receivable are written directly off the income statement (the debit is put to advertising expense). The accounting clerk likes to use only supportable numbers in the financial statements. The clerk doesn’t have much time to review older accounts. He makes sure he follows up on accounts that are over 90 days old.
The staff assistant summarized the accounts receivable confirmations that she mailed for a sample of customers as at March 31, 2019. It was noted in the working paper that the controller asked the staff assistant not to confirm one of the smaller receivables that was a special deal with the customer and they paid partially by cash to avoid HST. The staff assistant selected another account to replace this item in the sample.
The case is based on Canadian Audit Strategy. Based on the facts as outlined in the case attached, in your own words (do not plagiarize) provide a detailed memo documenting: a. a detailed Audit Plan (structured as follows: Risk, Approach, Materiality, Procedures); b. and a detailed assessment of internal control weaknesses identified, the implications of those weaknesses, and recommendations for improvement
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDER
CLICK ON THE LINK HERE: https://www.perfectacademic.com/orders/ordernow
Also, you can place the order at www.collegepaper.us/orders/ordernow / www.phdwriters.us/orders/ordernow
Do You Have Any Other Essay/Assignment/Class Project/Homework Related to this? Click Here Now [CLICK ME]and Have It Done by Our PhD Qualified Writers!!