Audit Case ch 6
ACCT401 – Section 101
Group Project – Appendix 6C
March 25, 2013
Rachel Barrows Mike Fields
Maria Gomozova
Sviatlana Lizun Patricia Vaz
Megan Wark
Very good! 100% +2 cb 6C-1
Summary of Audit Sections
Section Purpose Content
1
Objectives of the Engagement To describe the services that are to be rendered to the client (KCN). The objectives include: an audit of KCN's financial statements for the year ended 12/31/20X5 and to issue a letter of compliance with covenants of the client's letter of credit agreement.
2
Business and Industry Conditions To describe current business and industry conditions affecting KCN. KCN sells networking hardware and software to business customers. It has also begun developing it’s own software. It competes with other higher buying power companies such as Dell, HP, and Apple. Future industry outlook shows annual growth to be 3 percent for the next 3 years.
3
Planning Meetings To discuss when planning meetings for the audit of the current year-end will take place. On July 20th, auditors met with KCN controller, Loren Steele, and president, Sam Best to plan audit for year-end. On August 2nd, a planning meeting was held for all engagement team members.
4
Ownership and Management To describe the ownership and management of KCN KCN is a private company with 5 owners/stockholders; Terry Keystone, Mark Keystone, John Keystone, Keith Young, and Rita Young. Terry and Mark are active on the Board. None of the other owners take part in any form of management
5
Objectives, Strategies, and Business Risks Outlines KCN’s objectives, strategies, and potential business risks. Objectives are to raise sales 6% and net income 8% for the next 3 years; Strategies are to incorporate aggressive marketing, offer credit to higher risk
Group Project – Appendix 6C
March 25, 2013
Rachel Barrows Mike Fields
Maria Gomozova
Sviatlana Lizun Patricia Vaz
Megan Wark
Very good! 100% +2 cb 6C-1
Summary of Audit Sections
Section Purpose Content
1
Objectives of the Engagement To describe the services that are to be rendered to the client (KCN). The objectives include: an audit of KCN's financial statements for the year ended 12/31/20X5 and to issue a letter of compliance with covenants of the client's letter of credit agreement.
2
Business and Industry Conditions To describe current business and industry conditions affecting KCN. KCN sells networking hardware and software to business customers. It has also begun developing it’s own software. It competes with other higher buying power companies such as Dell, HP, and Apple. Future industry outlook shows annual growth to be 3 percent for the next 3 years.
3
Planning Meetings To discuss when planning meetings for the audit of the current year-end will take place. On July 20th, auditors met with KCN controller, Loren Steele, and president, Sam Best to plan audit for year-end. On August 2nd, a planning meeting was held for all engagement team members.
4
Ownership and Management To describe the ownership and management of KCN KCN is a private company with 5 owners/stockholders; Terry Keystone, Mark Keystone, John Keystone, Keith Young, and Rita Young. Terry and Mark are active on the Board. None of the other owners take part in any form of management
5
Objectives, Strategies, and Business Risks Outlines KCN’s objectives, strategies, and potential business risks. Objectives are to raise sales 6% and net income 8% for the next 3 years; Strategies are to incorporate aggressive marketing, offer credit to higher risk