CASE 1-2 BZ LIMITED Source: This case was adapted from 1993 Accounting 2 module material in the CA Program of the CAA and modified for current ISAS/ASAS. Standards: ISA/ASA 330 ISA/ASA300 ISA/ASA500. Subject matter: Audit plan Audit evidence. Your client, BZ Limited (BZ), operates brewery and bottling plants in various locations around the world. Each country has a Regional Processing Centre (RPC), which acts as the accounting and administrative centre for that country, Dach country prepares financial data and summarises the information into a standardised package format, This package is submitted to head office in Perth on a monthly basis, Material balance sheet items consist of inventories. trade receivables trade payables, brand names and property, plant and equipment. It is February 2014, you are currently planning the June 2014 audit and have the following information. Each situation is to be considered independently: A Civil unrest in Country X makes it impossible for branch auditors to visit the RPC to carry out audit procedures on your behalf, Due to a communications blackout, you are unable to ascertain whether the RPC is still functional Country X contributes approximately 8 per cent of BZ's turnover. B In past years, head office has maintained tight control over the operations of BZ. However, in keeping with current Total Quality Management principes, many functions formerly performed at head office are now performed by each RPC. Management has expressed some concern at the quality of the monthly reporting packages which it has been receiving, particularly those from the South Pacific region. C Senior management has been engaged in high-level discussions with a major competitor, L Limited, with the view to establishing a joint venture operation in the UK. The joint venture agreement, signed in early February, states in part: BZ agrees to close down its current operations in the United Kingdom within one year of the agreement being signed. (These operations currently contribute 4 per cent of total net profit.) BZ agrees that two of its six directors will be seconded to the joint venture for two years to oversee its operations' (This will involve the directors moving from Australia to the United Kingdom.) Required: Explain how each situation would affect your overall audit plan, include reference to the nature and extent of audit evidence which would need to be accumulated.

CASE 1-2 BZ LIMITED Source: This case was adapted from 1993 Accounting 2 module material in the CA Program of the CAA and modified for current ISAS/ASAS. Standards: ISA/ASA 330 ISA/ASA300 ISA/ASA500. Subject matter: Audit plan Audit evidence. Your client, BZ Limited (BZ), operates brewery and bottling plants in various locations around the world. Each country has a Regional Processing Centre (RPC), which acts as the accounting and administrative centre for that country, Dach country prepares financial data and summarises the information into a standardised package format, This package is submitted to head office in Perth on a monthly basis, Material balance sheet items consist of inventories. trade receivables trade payables, brand names and property, plant and equipment. It is February 2014, you are currently planning the June 2014 audit and have the following information. Each situation is to be considered independently: A Civil unrest in Country X makes it impossible for branch auditors to visit the RPC to carry out audit procedures on your behalf, Due to a communications blackout, you are unable to ascertain whether the RPC is still functional Country X contributes approximately 8 per cent of BZ's turnover. B In past years, head office has maintained tight control over the operations of BZ. However, in keeping with current Total Quality Management principes, many functions formerly performed at head office are now performed by each RPC. Management has expressed some concern at the quality of the monthly reporting packages which it has been receiving, particularly those from the South Pacific region. C Senior management has been engaged in high-level discussions with a major competitor, L Limited, with the view to establishing a joint venture operation in the UK. The joint venture agreement, signed in early February, states in part: BZ agrees to close down its current operations in the United Kingdom within one year of the agreement being signed. (These operations currently contribute 4 per cent of total net profit.) BZ agrees that two of its six directors will be seconded to the joint venture for two years to oversee its operations' (This will involve the directors moving from Australia to the United Kingdom.) Required: Explain how each situation would affect your overall audit plan, include reference to the nature and extent of audit evidence which would need to be accumulated.

Accounting Information Systems

10th Edition

ISBN:9781337619202

Author:Hall, James A.

Publisher:Hall, James A.

Chapter1: The Information System: An Accountant’s Perspective

Section: Chapter Questions

Problem 5P

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Transcribed Image Text:CASE 1-2 BZ LIMITED Source: This case was adapted from 1993 Accounting 2 module material in the CA Program of the CAA and modified for current ISAS/ASAS. Standards: ISA/ASA 330 ISA/ASA300 ISA/ASA500. Subject matter: Audit plan Audit evidence. Your client, BZ Limited (BZ), operates brewery and bottling plants in various locations around the world. Each country has a Regional Processing Centre (RPC), which acts as the accounting and administrative centre for that country, Dach country prepares financial data and summarises the information into a standardised package format, This package is submitted to head office in Perth on a monthly basis, Material balance sheet items consist of inventories. trade receivables trade payables, brand names and property, plant and equipment. It is February 2014, you are currently planning the June 2014 audit and have the following information. Each situation is to be considered independently: A Civil unrest in Country X makes it impossible for branch auditors to visit the RPC to carry out audit procedures on your behalf, Due to a communications blackout, you are unable to ascertain whether the RPC is still functional Country X contributes approximately 8 per cent of BZ's turnover. B In past years, head office has maintained tight control over the operations of BZ. However, in keeping with current Total Quality Management principes, many functions formerly performed at head office are now performed by each RPC. Management has expressed some concern at the quality of the monthly reporting packages which it has been receiving, particularly those from the South Pacific region. C Senior management has been engaged in high-level discussions with a major competitor, L Limited, with the view to establishing a joint venture operation in the UK. The joint venture agreement, signed in early February, states in part: BZ agrees to close down its current operations in the United Kingdom within one year of the agreement being signed. (These operations currently contribute 4 per cent of total net profit.) BZ agrees that two of its six directors will be seconded to the joint venture for two years to oversee its operations' (This will involve the directors moving from Australia to the United Kingdom.) Required: Explain how each situation would affect your overall audit plan, include reference to the nature and extent of audit evidence which would need to be accumulated.

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