Auditing | Accounting homework help

EZ Furniture Wholesalers, Inc.

You are a staff auditor with BLB CPAs.  BLB CPAs has been retained to perform the audit of the fiscal year 2019 by EZ Furniture Wholesalers, Inc. EZ Furniture Wholesalers, Inc. has been a client of BLB CPAs for several years. You are auditing the allowance for doubtful accounts and have concerns about some contradictory evidence.

Background Information

EZ Furniture Wholesalers, Inc. reserves for its allowance for doubtful accounts based on standard reserve percentages supported by historical collection experience. Management uses the same process for estimating the allowance for doubtful accounts (the “reserve”), as it did in the prior year. As part of its risk assessment procedures, the engagement team identified the following risk of material misstatement related to the valuation assertion: 

• The entity may not appropriately update its reserve policy (including updates to reserve percentages) for changes in circumstances.

Note that the engagement team may have identified additional risks of material misstatement related to the valuation assertion identified as part of its risk assessment procedures; however, you must focus on this specific risk of material misstatement. 

In addition, this risk was not identified as a fraud risk. Youobtained the following evidence from the audit procedures performed to address this risk:

• The current-year reserve as a percentage of gross receivables is consistent with prior years, although there was an increase in revenues, gross receivables, and the related reserve. 

• Bad debt expense has remained consistent as a percentage of gross revenue over the past several years.• Retrospective review of receivable collections indicates that management’s reserves have historically been accurate.

• Economic conditions have been fairly stable and are predicted to remain stable. 

• Revenues increased substantially year over year as a result of the introduction of a new product line. 

• The new product line is marketed toward customers in the restaurant industry, in which the entity does not currently have an established customer base.

• The restaurant industry generally has a higher rate of business failure than other customer segments.

• The entity’s collections experience has primarily been with customers in the retail and professional services industries; the entity has very little collections experience with the new product line, given the recent launch.

• Approved sales terms have not changed year to year (e.g., sales personnel may offer an extension of credit of up to 100 percent of the purchase price consistent with prior year, creditworthiness is determined in the same manner, payment terms are consistent with prior year).

• Sales of the new product line are more frequently 100 percent financed versus sales of the existing product lines, resulting in an increase in gross receivables.

• Competitors who manufacture similar restaurant furniture products have higher reserves as a percentage of their trade receivables.

Required:

Your manager has asked you to prepare a document (Titled EZ Furniture Wholesalers Summary of Contradictory Evidence) answering the following questions.  The format of the document should first state the question; second, provide the relevant PCAOB AS Standard(s), and AICPA AU Standard(s) (you may cut and past the applicable sections of the standard); and third, your interpretation of how the standards applies to the case.  Each question should follow this format.  Save the document as YourLastNameEZ.

1. Identify and summarize the corroborative and contradictory audit evidence. 

2. Determine what additional information, if any, is needed to reach a conclusion regarding management’s assertion.

3. On the basis of the case facts, determine whether management’s assertion is supportable and how additional information obtained might change your conclusion.

Prime Paper Help
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.