Topics: Procurement, Purchase order, Accounts receivable Pages: 6 (1576 words) Published: February 5, 2013
Integrated Case Application Part II & III

DeVry University

Olumide Ajileye

Margaret Daughtry

Staneecha Henderson

Sasha De La Rosa

Porttra Smith

Quintina Haywood

PART II 9-37


After a thorough analysis and careful consideration regarding the factors and conditions that have been set forth in the text, it is reasonable to come to the following conclusions: Pinnacle has a variety of areas that are of concern when performing and audit and verifying good financial practices. It seems that Pinnacle is at a crossroads when it comes to their technological future within the energy industry and that these decisions are affecting a number of practices throughout Pinnacle. Management integrity is being compromised when a Vice President of the company is directly contracting employees from a business his wife owns. This in and of itself seems like a conflict of interest all across the board especially being that the Vice President feels the need to wear the t-shirt around work and opening express the relationship he has with the company. Moreover, the fact that Pinnacle is approving internals loans is deeply concerning while also allowing it’s employees to do construction work in it’s building’s addition rather than the appropriate construction company. Management seems to have cultivated an environment that allows such activities that may in some eyes be an alarming lapse of integrity. Also, seeing that Pinnacle has a high turnover rate with management within its internal audit department is alarming. In most cases, where there is smoke, there is fire. Being that Pinnacle is a publicly traded company, it has responsibilities to its shareholders to provide appropriate and accurate information its financial statements and to act in the best interest of all its stakeholders. With the board of directors deciding to raise debt to finance by a significant amount for new construction purposes, it shows an interest in growth but a lack of understanding on the timing the growth should take place. More concerning is that fact that Pinnacle has a single company that accounts for more than 15% of it’s A/R and the account has been outstanding for several months. That is a significant amount to be placed on bad debt. Based on the analysis, it is reasonable and accurate to estimate that Pinnacle will have some if not a significant likelihood to have financial difficulty in the future unless a revamping is done from top to bottom. Management has shown a lack of integrity with their actions and external users cannot rely heavily on information being presented. B.

An acceptable audit risk is the measure of how willing the auditor is to accept that financial statements may have been materially misstated after an audit is completed by an unqualified opinion has been issued. Based on the dynamics and factor provided it is fitting to assess that Pinnacle has a high acceptable audit risk. This is mainly due to the level of uncertainty with Pinnacle’s financial activities. C.

According to the audit results and the information obtained from the company's financial statements, there are a number of risks that Pinnacle have. These include misstatement of allowance of bad debts, the outstanding accounts receivable that has been out for several months, and machinery and equipment. It appears that there is a lot of cross-placement in assets within the difference companies, which causes wrong information reported on the financial statements.

PART III 10-43

Identify key deficiencies for acquisitions and for cash disbursements. After you decide on the deficiencies, include each significant deficiency or material weakness in the bottom portion of one of the two matrices: During a meeting with the facilities director, we were informed that the board of directors had decided to raise a enormous amount of debt to...
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