Hasbro Discussion Case Assume you're the senior auditor for KPMG and your audit client is Hasbro (NASDAQ:HAS) who makes toys and games. Hasbro had an exceptional FYE 2020 reporting a profit of $223m, a 57% reduction over 2019, primarily from COVID and the earlier success of Baby Yoda. As of 12/31/20, Hasbro has 27,000 active accounts receivable customers who only purchase merchandise on account, mostly toy stores, with an accounts receivable balance ranging in value from $120 to larger amounts (e.g., Target at $274m and Wal-Mart at $185m). The audit team has elected to use statistical sampling in testing the accounts receivable. The staff accountant selected a pre-sample of 100 random accounts and sent confirmations. The 100 accounts had an average book value balance of $47,140, per Hasbro's accounts receivable subsidiary ledger. The audit procedure produced 80 returned confirmation letters with an average balance of $49,400. Of those 80, 76 had no exceptions noted, however four had issues. Balance per Acc/Rec Acc/Rec per Customer Subsidiary Ledger Confirmation Explanation for Number as of 12/31/20 as of 12/31/20 Exception {Client's Balance} Customer's Balance} Client pricing error on two invoices based 5523 $2,728 $2,498 upon the customer's purchase order and client's appropriate price listings. 13314 $53,429 $0 14556 $21,497 $12,497 Customer mailed check on 12/29/20, check recorded in cash receipts journal on 1/4/21 (M), part of 1/5/21 (T) daily deposit. Client had a transposition error in the sales journal. The exception was noted in the first two digits. The Accounts Receivable Subsidiary ledger was corrected 1/12/21. Customer returned $12,199 of damaged merchandise on 12/24/20, counted in ending inventory on 12/31/20, and credit was issued on 1/6/21. 22782 $115,311 $103,112 TOTAL $192,965 $118,107 KPMG has audited Hasbro since 1964 and seldom had an accounting or auditing dispute over the past five decades. Given this history, the audit partner has decided that all audit conclusions may be stated at 90% confidence and that there can be a 1.5% materiality level for accounts receivable. What is the auditor's best estimate of the true value of accounts receivable based upon the pre-sample? a. Client's Book Value of Presample: $ b. Audited Value of Presample: $ c. Auditor's Best Estimate of Population: $ d. Desired Game Plan: Upper Bound d $ Lower Bound $ e. Graph the findings: Hasbro Discussion Case Assume you're the senior auditor for KPMG and your audit client is Hasbro (NASDAQ:HAS) who makes toys and games. Hasbro had an exceptional FYE 2020 reporting a profit of $223m, a 57% reduction over 2019, primarily from COVID and the earlier success of Baby Yoda. As of 12/31/20, Hasbro has 27,000 active accounts receivable customers who only purchase merchandise on account, mostly toy stores, with an accounts receivable balance ranging in value from $120 to larger amounts (e.g., Target at $274m and Wal-Mart at $185m). The audit team has elected to use statistical sampling in testing the accounts receivable. The staff accountant selected a pre-sample of 100 random accounts and sent confirmations. The 100 accounts had an average book value balance of $47,140, per Hasbro's accounts receivable subsidiary ledger. The audit procedure produced 80 returned confirmation letters with an average balance of $49,400. Of those 80, 76 had no exceptions noted, however four had issues. Balance per Acc/Rec Acc/Rec per Customer Subsidiary Ledger Confirmation Explanation for Number as of 12/31/20 as of 12/31/20 Exception {Client's Balance} Customer's Balance} Client pricing error on two invoices based 5523 $2,728 $2,498 upon the customer's purchase order and client's appropriate price listings. 13314 $53,429 $0 14556 $21,497 $12,497 Customer mailed check on 12/29/20, check recorded in cash receipts journal on 1/4/21 (M), part of 1/5/21 (T) daily deposit. Client had a transposition error in the sales journal. The exception was noted in the first two digits. The Accounts Receivable Subsidiary ledger was corrected 1/12/21. Customer returned $12,199 of damaged merchandise on 12/24/20, counted in ending inventory on 12/31/20, and credit was issued on 1/6/21. 22782 $115,311 $103,112 TOTAL $192,965 $118,107 KPMG has audited Hasbro since 1964 and seldom had an accounting or auditing dispute over the past five decades. Given this history, the audit partner has decided that all audit conclusions may be stated at 90% confidence and that there can be a 1.5% materiality level for accounts receivable. What is the auditor's best estimate of the true value of accounts receivable based upon the pre-sample? a. Client's Book Value of Presample: $ b. Audited Value of Presample: $ c. Auditor's Best Estimate of Population: $ d. Desired Game Plan: Upper Bound d $ Lower Bound $ e. Graph the findings