Bloomington Bees Case

Topics: Financial audit, Audit, Revenue Pages: 2 (647 words) Published: October 21, 2012
BLOOMINGTON BEES CASE The Bloomington Bees, an independent minor league baseball team, competes in the Mid-States League. The team finished in second place in 2011 with an 87-57 record. The Bees 2011 cumulative attendance of 434,348 spectators set a new record for the team, up from 390,121 in 2010. Bank loan covenants require the Bees to submit audited financial statements annually to the bank. The accounting firm of Howe and Wen, CPAs, has served as the Bees auditors for the past five years. One of the major audit areas involves testing ticket revenues. The revenues reached nearly $1.9 million in 2010. In prior years, the audit plan called for extensive detailed testing of revenue accounts to gain assurance that reported ticket revenues were fairly stated. Nadine Mercil, a new audit manager, just received the assignment to be the manager on the 2011 audit. Nadine worked previously on the Bees prior year audits as a staff auditor. When she learned she would be managing the current year engagement, she immediately thought back to all the hours of detailed testing of ticket sales she had performed. On some of her other clients, Nadine has been successful at redesigning audit plans to make better use of analytical procedures to develop expectations and reduce substantive testing. She is beginning to wonder if there is a more efficient way to gain assurance by developing expectations about ticket revenues on the Bees’ engagement. In her first meeting with Bees’ management for the 2011 audit, Nadine learned that the Bees now use an outside company, Tik-et Taker, to operate ticket gates for their home games. The terms of the contract requires Tik-et Takers to collect ticket stubs so that they can later report total tickets collected per game. While Tik-et Taker does not break down the total tickets collected into the various price categories, Nadine thinks there may be a way to develop an analytical procedure using the independently generated total ticket numbers and...
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