back to top Case B Value: 20% Due Date: 12-May-2019 Return Date: 04-Jun-2019 Length: 3,000 words Submission method options: Alternative submission method Task back to top Background You are an experienced audit manager at Samway Baker Fitzgerald (SBF), an accounting firm with offices in Orange, Wagga Wagga, Tamworth, Port Macquarie and Albury in NSW, Toowoomba in Queensland and Ballarat in Victoria. In the next 18 months, you hope to be promoted to partner at the Orange office. Although a medium sized firm by national standards, SBF includes Australias largest regionally based auditing practice. Most of SBFs audit clients are in the mining, manufacturing, and agriculture industries. For various reasons all of those industries are currently under pressuremining from a downturn in commodity prices, manufacturing from fierce overseas competition and agriculture from a devastating drought that continues to grip Eastern Australia. Its just before Christmas and you are meeting with your audit senior, Wayne Wiadrowski, to finalise planning the audit of Always Precise Instruments Pty Limited (API), a manufacturer and supplier of small arms military equipment (i.e., rifles, machine guns, ammunition) with factories in Wagga Wagga and Toowoomba and warehouses in Sydney, Brisbane, and Perth. Using the companys financial report, its budget for 2018 and industry benchmarks, as well as your 5 years of experience on the API assignment, Wayne has compiled the following information: Ratio 2018 (Unaudited) 2018 Budget 2017 (Audited) Industry benchmark Current ratio: 1 1.64 1.54 1.54 1.84 Quick asset ratio: 1 0.91 0.87 0.87 1.1 Return on equity % 14.7 18.4 16.6 17.3 Return on total assets % 12.5 16.0 14.9 16.3 Gross margin % 6.5 10.8 10.3 10.8 Marketing expense % 4.4 3.6 3.8 4.0 Admin expenses/sales % 3.4 3.4 3.6 3.8 Times interest earned 3.6 6.3 4.6 4.2 Days in inventory 34.9 32.2 32.9 31.8 Days in accounts receivable 53.0 49.8 51.5 46.9 Debt to equity ratio: 1 0.61 0.43 0.52 0.50