Time Budget
Time Budget
Advanced Auditing
April 14, 2011
It is not only important for auditors to keep accurate and precise working papers for an audit, it is also important for auditors to keep accurate and precise records of their time spent on the tasks associated with an audit. “When accountants complete work without recording it as chargeable time, potential revenue can be lost and erroneous planning and poor personnel decisions can result.” (Lightner, et. al., 1983) Hamilton Wong is one of six accountants assigned to the audit of Wille and Lomax, Inc., a public company which sells general type merchandise, such as briefcases, leather goods, luggage and travel accessories, and gift items, such as costume jewelry imported from Pacific Rim countries. Their wholesale division also markets their merchandise to specialty retailers throughout the United States, which accounts for sixty percent of the company’s annual sales. Wille and Lomax, Inc. is the firm’s second largest client and Hamilton Wong’s firm spent three months working on the audit. In addition to his audit responsibilities of supervising and coordinating the audit procedures for various accounts, Hamilton Wong also has administrative responsibilities. One of those responsibilities is to collect, code, and input the time worked each week by each of the auditors assigned the Wille & Lomax, Inc., audit engagement. After Hamilton Wong compiles the information into an electronic spreadsheet, he submits weekly reports to Angela Sun, the senior accountant who supervises the field work on the audit engagement. Because of this responsibility, Hamilton Wong is aware that the audit is behind schedule and he is also aware that another in-charge accountant, Lauren Hutchinson, is underreporting the time she spends on her audit tasks. Through observing Lauren Hutchinson’s behaviors over the last few months, such as slipping working papers into her briefcase at the end of the day and returning the next
Advanced Auditing
April 14, 2011
It is not only important for auditors to keep accurate and precise working papers for an audit, it is also important for auditors to keep accurate and precise records of their time spent on the tasks associated with an audit. “When accountants complete work without recording it as chargeable time, potential revenue can be lost and erroneous planning and poor personnel decisions can result.” (Lightner, et. al., 1983) Hamilton Wong is one of six accountants assigned to the audit of Wille and Lomax, Inc., a public company which sells general type merchandise, such as briefcases, leather goods, luggage and travel accessories, and gift items, such as costume jewelry imported from Pacific Rim countries. Their wholesale division also markets their merchandise to specialty retailers throughout the United States, which accounts for sixty percent of the company’s annual sales. Wille and Lomax, Inc. is the firm’s second largest client and Hamilton Wong’s firm spent three months working on the audit. In addition to his audit responsibilities of supervising and coordinating the audit procedures for various accounts, Hamilton Wong also has administrative responsibilities. One of those responsibilities is to collect, code, and input the time worked each week by each of the auditors assigned the Wille & Lomax, Inc., audit engagement. After Hamilton Wong compiles the information into an electronic spreadsheet, he submits weekly reports to Angela Sun, the senior accountant who supervises the field work on the audit engagement. Because of this responsibility, Hamilton Wong is aware that the audit is behind schedule and he is also aware that another in-charge accountant, Lauren Hutchinson, is underreporting the time she spends on her audit tasks. Through observing Lauren Hutchinson’s behaviors over the last few months, such as slipping working papers into her briefcase at the end of the day and returning the next
References: Sharon M Lightener, James J Leisenring, & Allen J Winters. (1983). Underreporting chargeable time: its effects on client billing, future budget preparation and staff evaluation and scheduling. Journal of Accountancy (pre-1986), 155(000001), 52. Retrieved April 3, 2011, from ABI/INFORM Global. (Document ID: 75194603). Smith, W Robert, Hutton, Marguerite R, & Jordan, Charles E. (1996). Underreporting time: Accountants are doing it more and enjoying it less. The CPA Journal, 66(10), 67. Retrieved April 3, 2011, from ABI/INFORM Global. (Document ID: 10318057).L