Dodd Manufacturing Corporation has engaged you to attest to the reasonableness of the assumptions underlying its forecast of revenues, costs, and net income for the next calendar year, 2021. Four of the assumptions used by Dodd are as follows: 1. Dodd intends to sell certain real estate and other facilities held by Division B at an after-tax profit of $600,000; the proceeds of this sale will be used to retire outstanding debt. 2. Dodd will call and retire all outstanding 9 percent subordinated debentures (callable at 108). The debentures are expected to require the full call premium given present market interest rates of 8 percent on similar debt. A rise in market interest rates to 9 percent would reduce the loss on bond retirement from the projected $200,000 to $190,000. 3. Current labor contracts expire on September 1, 2021, and the new contract is expected to result in a wage increase of 5.5 percent. Given the forecasted levels of production and sales, after-tax operating earnings would be reduced approximately $50,000 for each percentage point of wage increase in excess of the expected contract settlement. 4. The sales forecast for Division A assumes that the new Portsmouth facility will be complete and operating at 40 percent of capacity on February 1, 2021. It is highly improbable that the facility will be operational before January 2021. Each month's delay would reduce Division A sales by approximately $80,000 and operating earnings by $30,000. Required: For each assumption, state the sources of evidence and procedures you would use to determine the reasonableness of that assumption. SA has accepted the engagement as auditor of Love Company (an issuer). Love uses an outside entity (Worknight) to process a significant volume of transactions related to a material account balance. Because SA will need to obtain some assurance as to the operating effectiveness of those controls for both the opinion on the financial statements and the opinion on internal control over financial reporting, they are considering various alternatives, including engaging PM to test key controls applied at Worknight. Required: a. Define user auditor, service auditor, user organization, and service organization. Identify the parties who meet these definitions in this scenario. Shapel b. Identify and define the two major types of Service Organization Controls 1 (SOC 1) reports. What are the major differences in these two types of SOC 1 reports? Shape2 ? c. In this particular instance, which type of SOC 1 report should SA request? Why? d. Identify the major contents of the SOC 1 report that would be appropriate for SA in this engagement. Shape4 ? Henry's Health Food Store maintains a perpetual inventory on its computer. The sales representative from A-Plus Vitamins has recommended the following to Henry: All the files should have password protection. A-Plus Vitamins should be given the URL and the password for Henry's inventory file on the computer, which can be accessed from outside. A-Plus Vitamins will search the inventory for items that fall below an established reorder point and will automatically ship a set amount of product to Henry's