[Solved] ACCT444 Course Project – Deliverable #2 Solution
ACCT444 Course Project – Deliverable #2
An engagement team is performing the audit of the financial statements of Griffin, Inc. as of and for the year ended December 31, year 7.
Task 1:
The senior accountant has identified three misstatements that have been carried forward onto the summary of proposed audit adjustments. Determine the impact of the identified misstatements on the financial statement ratios noted below.
For each of the identified misstatements below, indicate the impact on the financial ratio identified. In columns D and E, select the impact, if any, that the misstatement has on the financial ratio from the option list. Selections used once, more than once, or are not at all. Consider each misstatement independently. Choices for Columns D and E:
| A | B | C | D | E | |||||
| 1 | Account | Debit | Credit | Impact on current ratio | Impact on profit margin | ||||
| 2 | Payroll expense | 72,000 |
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| 3 | Accrued payroll | 72,000 | |||||||
| 4 | |||||||||
| 5 | Depreciation expense | 125,000 |
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| 6 | Accumulated depreciation | 125,000 | |||||||
| 7 | |||||||||
| 8 | Prepaid insurance | 15,000 |
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| 9 | Insurance expense | 15,000 | |||||||
Task 2:
A CPA firm is preparing for the year 6 audit of Hiver Co., a calendar-year-end non-issuer. An audit staff member used the year 5 audit request list for Hiver as the basis for drafting the year 6 request list. Additional client information was obtained during the audit planning meeting with the client.
As the audit senior for this engagement, it is your responsibility to review and revise the year 6 request list for Hiver, as needed. Use the additional client information in the file ACCT444CD#2Exhibits to revise the draft request list, correcting any errors and removing any inappropriate or unnecessary items, given the overall context and purpose of the list. Ensure that the year 6 list is appropriate, given the information provided.
Materiality for the year 6 financial statement audit is $55,000.
To revise the Audit Request List, go to each section of red text below and select the needed correction, if any, from the list provided. If the underlined text is already correct in the context of the note disclosure, select [Leave Original text] from the list. If removal of the entire underlined text is the best revision to the list, select [Delete] from the list.
| Hiver Co. Year ended December 31, year 6 Audit Request List (DRAFT) Please have the materials listed below ready when we arrive on site. Unless a different date is specifically stated, these documents should be as of and for the year ended December 31, year 6. 1. Final trial balance 2. Bank reconciliations for March, September, and December, year 6 3. Bank statements for December, year 6, and January, year 7 4. Property, plant and equipment roll-forward
5. Edgewater Industrial Estate Lease Agreement: Chose an option below a. [Leave Original text] Edgewater Industrial Estate Lease Agreement b. Delete Text c. Change text to Edgewater Industrial Estate property tax expense analysis d. Change text to Edgewater Industrial Estate purchase contract e. Change text to Proof of Edgewater Industrial Estate property insurance
6. Furniture and fixtures purchase documentation: Choose an option below a. [Original text] Furniture and fixtures purchase documentation b. [Delete Text] c. Furniture and fixtures sale documentation d. Office equipment purchase documentation e. Office equipment sale documentation
7. New motor vehicle purchase agreement a. [Original text] b. [Delete Text] c. Documentation supporting the sale of the motor vehicle asset d. Documentation supporting the scrapping of the motor vehicle asset e. New motor vehicle lease agreement
14. Documentation supporting issuance of 50,000 shares at $0.30 per share a. [Original text] b. [Delete Text] c. Documentation supporting issuance of 150,000 shares at $0.10 per share d. Documentation supporting issuance of 150,000 shares at $0.20 per share e. Documentation supporting issuance of 150,000 shares at $0.30 per share f. Documentation supporting issuance of 50,000 shares at $0.10 per share g. Documentation supporting issuance of 50,000 shares at $0.20 per share
a. [Original text] Management’s review of third-party loan interest rates b. [Delete Text] c. Copy of the loan agreement with J. Hiver d. Copy of the loan agreement with M. Moore e. Evidence of approval by D. Chen for the loan to J. Hiver f. Management’s due diligence work related to providing the loans
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An engagement team is performing the audit of the financial statements of Griffin, Inc. as of and for the year ended December 31, year 7.
Task 1:
The senior accountant has identified three misstatements that have been carried forward onto the summary of proposed audit adjustments. Determine the impact of the identified misstatements on the financial statement ratios noted below. Get Community Health Concepts Essay Help!!
For each of the identified misstatements below, indicate the impact on the financial ratio identified. In columns D and E, select the impact, if any, that the misstatement has on the financial ratio from the option list. Selections used once, more than once, or are not at all. Consider each misstatement independently. Choices for Columns D and E:
| A | B | C | D | E | |||||
| 1 | Account | Debit | Credit | Impact on current ratio | Impact on profit margin | ||||
| 2 | Payroll expense | 72,000 |
|
|
|||||
| 3 | Accrued payroll | 72,000 | |||||||
| 4 | |||||||||
| 5 | Depreciation expense | 125,000 |
|
|
|||||
| 6 | Accumulated depreciation | 125,000 | |||||||
| 7 | |||||||||
| 8 | Prepaid insurance | 15,000 |
|
|
|||||
| 9 | Insurance expense | 15,000 | |||||||
Task 2:
A CPA firm is preparing for the year 6 audit of Hiver Co., a calendar-year-end non-issuer. An audit staff member used the year 5 audit request list for Hiver as the basis for drafting the year 6 request list. Additional client information was obtained during the audit planning meeting with the client.
As the audit senior for this engagement, it is your responsibility to review and revise the year 6 request list for Hiver, as needed. Use the additional client information in the file ACCT444CD#2Exhibits to revise the draft request list, correcting any errors and removing any inappropriate or unnecessary items, given the overall context and purpose of the list. Ensure that the year 6 list is appropriate, given the information provided.
Materiality for the year 6 financial statement audit is $55,000.
To revise the Audit Request List, go to each section of red text below and select the needed correction, if any, from the list provided. If the underlined text is already correct in the context of the note disclosure, select [Leave Original text] from the list. If removal of the entire underlined text is the best revision to the list, select [Delete] from the list.
| Hiver Co. Year ended December 31, year 6 Audit Request List (DRAFT) Please have the materials listed below ready when we arrive on site. Unless a different date is specifically stated, these documents should be as of and for the year ended December 31, year 6. 1. Final trial balance 2. Bank reconciliations for March, September, and December, year 6 3. Bank statements for December, year 6, and January, year 7 4. Property, plant and equipment roll-forward
5. Edgewater Industrial Estate Lease Agreement: Chose an option below a. [Leave Original text] Edgewater Industrial Estate Lease Agreement b. Delete Text c. Change text to Edgewater Industrial Estate property tax expense analysis d. Change text to Edgewater Industrial Estate purchase contract e. Change text to Proof of Edgewater Industrial Estate property insurance
6. Furniture and fixtures purchase documentation: Choose an option below a. [Original text] Furniture and fixtures purchase documentation b. [Delete Text] c. Furniture and fixtures sale documentation d. Office equipment purchase documentation e. Office equipment sale documentation
7. New motor vehicle purchase agreement a. [Original text] b. [Delete Text] c. Documentation supporting the sale of the motor vehicle asset d. Documentation supporting the scrapping of the motor vehicle asset e. New motor vehicle lease agreement
14. Documentation supporting issuance of 50,000 shares at $0.30 per share a. [Original text] b. [Delete Text] c. Documentation supporting issuance of 150,000 shares at $0.10 per share d. Documentation supporting issuance of 150,000 shares at $0.20 per share e. Documentation supporting issuance of 150,000 shares at $0.30 per share f. Documentation supporting issuance of 50,000 shares at $0.10 per share g. Documentation supporting issuance of 50,000 shares at $0.20 per share
a. [Original text] Management’s review of third-party loan interest rates b. [Delete Text] c. Copy of the loan agreement with J. Hiver d. Copy of the loan agreement with M. Moore e. Evidence of approval by D. Chen for the loan to J. Hiver f. Management’s due diligence work related to providing the loans
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