here is my assignment for audit class. please provide me answer as soon as possible.

Proli Footwear Planning Materiality Worksheet December 31, 2014 A. Planning Materiality = auditor's preliminary judgment about materiality levels; used as a guide to determine whether audit adjustments should be recognized Gross revenue Total assets Base Amount (larger of total revenue or total assets): Planning materiality calculation*: Amount from table Percentage from table Base Amount Planning Materiality B. Tolerable Misstatement = amount by which a specific account can be misstated without causing financial statements to be materially misleading Planning Materiality Commonly used factor 0.70 Tolerable Misstatement C. Testing Threshold = Materiality Threshold = value that, if exceeded, warrants specific level of investigation Tolerable Misstatement Testing Threshold** * West and Fair, CPAs, LLC uses the following table as a guideline when calculating planning materiality. If the Base Amount is: Over But not over $0 $ 5 million $ 5 million $10 million Planning Materiality is: Amount + (Percent x Base) 9,000 + 1.0% 30,000 + 0.5% $ 50 million 150,000 + 0.25% ** West & Fair, CPAs, LLC uses 1/3 of the tolerable misstatement Proli Footwear Analysis of Audit Risk Worksheet December 31, 2014 Indicate level of Ranking for evidence Indicate primary amount of audit Targeted required (Low, timing of audit evidence required Audit Inherent Control Detection Moderate, High, tests (Interim or (1=lowest; Risk Risk Risk* Risk Very High) Year-End) 7=highest) Audit Section Cash 10% 20% 70% Accounts Receivable & Sales Cycl 1% 25% 20% Inventory & Purchases Cycle 1% 50% 50% Long-Lived Assets 3% 25% 20% Current Liabilities 1% 50% 80% Non Current Liabilities 1% 40% 50% Equities 5% 20% 20% Auditor Conclusions: In which audit section does the greatest amount of audit resources need to be allocated? In which audit section does the least amount of audit resources need to be allocated? * Control risk is based on the preliminary assessment of internal control NOTE: DR = AR/(IR * CR) qattachments_5b61e26408f5a5c73360b0faee2d993ef14e0705.xls Proli Footwear Assessment of Risk of Material Errors and Irregularities Worksheet December 31, 2014 Factor Lower Risk Management Characteristics: Higher Risk Auditor Comment Management turnover Low High Emphasis on meeting earnings projections Little Very high 3 key middle managers hired by competition in 2012 in process of preparing budget and profit planning systems Reputation in business community Honest Improper conduct active and well respected in CT Looks for loopholes just hired new VP-financeprior VP not CMA or CPA Domination by single person strong family influence Management attitude on Complies with financial reporting GAAP Management operating style Effective oversight group Auditor Assessment of Management Characteristics = Sum of Above Operating Characteristics: Healthy OR Mixed OR healthy Status of industry Distressed Profitability relative to the industry Sensitivity of operating results to economy Organizational structure Rate of change in industry Adequate Inadequate somewhat lower than industry Low Very sensitive inelastic demand Centralized Decentralized with inadequate monitoring centralized Slow Rapid customer & marketing driven Indications of going Substantial None Characteristics concern problems doubt = Auditor Assessment of Operating Sum of Above Engagement Characteristics: none Misstatements in prior audits Few Many no prior audits Difficult to audit transactions Few Many leases Repeat engagement First audit first audit None Any unknown-but not anticipated Relationship with client Related party transactions Difficult accounting Few Many issues Auditor Assessment of Engagement Characteristics = Sum of Above not many anticipated OVERALL RISK ASSESSMENT = Sum of Three Sections Overall Risk Assessment Ratings: 16-25 = Low 26-35 = Moderate 36-49 = High Auditor Risk Assessment (1=low, 2=moderate, 3=high) Proli Footwear Analytical Review Worksheet - Selected Ratios (All amounts are in 1,000s) December 31, 2014 Industry Ratio 2014 Unaudited Amount Ratio 2013 Unaudited Amount Ratio 1/2 2012 Unaudited Amount Ratio PROFITABILITY RATIOS Gross Profit Margin: 33.1% A Gross Profit 44,892 Net Sales 160,053 Return On Sales 4.5% 37,203 28.0% 134,197 4.7% 134,197 Net Income 7,457 Net Sales 160,053 Return on Equity: 16.2% 27.7% A 5,925 4.4% A Net Income 7,457 Equity (Ending) 68,620 10.9% 62,576 9.5% 7,457 112,113 6.7% 5,925 101,516 5.8% Return on Total Assets: Net Income Total Assets(Ending) 9.6% 5,925 A Profitability appears to be [increasing / decreasing / unchanged / not relevant] Discuss income trend and the effect on the return ratios. How does Proli compare to the industry? Auditor summary of profitability: Are there any specific accounts that should be tested more thoroughly than others? Industry Ratio 2014 Unaudited Amount Ratio 2013 Unaudited Amount Ratio 2012 Unaudited Amount Ratio SOLVENCY RATIO Debt to equity: Total Liabilities Total Equity(Ending) 72.0% A 43,493 68,620 38,940 62,576 63.4% 62.2% Solvency is [improving, worse, no change, not relevant]. How does Proli compare to the industry? Auditor summary of solvency: Are there any specific accounts that should be tested more thoroughly than others? Proli Footwear Analytical Review Worksheet - Selected Ratios (All amounts are in 1,000s) December 31, 2014 Industry Ratio 2014 Unaudited Amount Ratio 2013 Unaudited Amount Ratio 2/2 2012 Unaudited Amount Ratio LIQUIDITY RATIOS Current Ratio: Current Assets Current Liabilities 3.4 Quick Ratio: Cash + Acc Rec (net) Current Liabilities 1.4 A 78,715 24,874 3.2 69,286 16,747 4.1 30,598 24,874 1.2 30,164 16,747 1.8 160,053 26,453 6.1 134,197 24,297 5.5 A TURNOVER Accts Receivable Turnover Net Sales Average Acc Rec 9.4 A Average Accts Receivable (Net) Acc Rec-Beginning + Acc Rec-Ending Average (sum2) Inventory Turnover: Cost of Sales Average Inventory 4.1 22,776 30,129 25,817 22,776 26,453 24,297 A 115,161 38,842 Average Inventory: Inventory-Beginning + Inventory-Ending Average (sum2) 3.0 34,704 42,980 96,994 33,256 2.9 31,807 34,704 38,842 33,256 Liquidity rates are [improving, worsening, unchanged, not relevant]. The accounts receivable turnover trend is [favorable, unfavorable]. Explain. The inventory turnover trend is [favorable, unfavorable]. Explain. How does Proli compare to the industry? Auditor summary of liquidity: Are there any specific accounts that should be tested more thoroughly than others? AUDITOR OVERALL CONCLUSION: Based on this analysis, which areas deserve greater audit emphasis? A = Agreed information to reference book containing industry statistics *Note: 2011 balances are not available so end-of-year amounts rather than averages are used to calculate ratios. RP qattachments_5b61e26408f5a5c73360b0faee2d993ef14e0705.xls Proli Footwear Vertical Analysis ($ in 1,000) December 31, 2014 Balance Cash and Cash Equivalents Trade Accounts Receivable, net Inventories Other Current Assets Total Current Assets Total Plant Assets Total Intangible Assets Other Assets Total Assets Current Maturities of Long-Term Liabilities Notes Payable Accounts Payable and Accrued Expenses Total Current Liabilities Long Term Debt and Lease Obligations Other Long-Term Liabilities Total Liabilities Common Stock Additional Paid in Capital Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Common Size Auditor Summary: Exceeds, below, equal to industry Industry 319 25,466 43,668 4,718 74,171 15,381 14,568 3,285 0.3% 23.7% 40.7% 4.4% 69.1% 14.3% 13.6% 3.1% 5.2% 19.8% 46.1% 2.3% 73.4% 16.1% 2.4% 8.1% 107,405 100.0% 100.0% 441 12,800 11,735 24,976 5,962 3,357 34,295 50 22,500 50,558 73,108 0.4% 11.9% 10.9% 23.3% 5.6% 3.1% 31.9% 0.0% 20.9% 47.1% 68.1% 3.1% 16.6% 10.3% 38.3% 10.7% 4.1% 53.1% 107,403 100.0% 100.0% A A A A A A A A A A A A A A 46.9% Auditor Overall Conclusion: A = Agreed information to reference book containing industry statistics Proli Footwear Vertical Analysis ($ in 1,000) December 31, 2014 Net Sales Cost of Goods Sold Gross Profit Selling and Administrative Expenses Operating Income Other Income/(Expense) Income before Income Taxes Income Tax Expense Net Income Balance 146,745 108,712 38,033 32,876 5,157 (1,465) 3,692 1,600 2,092 Common Size Industry 100.0% 100.0% 74.1% 66.9% A 25.9% 33.1% A 22.4% 29.2% A 3.5% 3.9% A -1.0% 1.3% A 2.5% 2.6% A 1.1% 1.4% Auditor Summary: Exceeds, below, equal to industry Auditor Overall Conclusion: A = Agreed information to reference book containing industry statistics 1/2 2/2 PRO LI F O OT W EAR W O R K I N G T R IAL BALAN C E - D E C E M B E R Account Preliminary Balances Accounts # Debit Credit Imprest Petty Cash Fund 1000 3,000 Cash-Operating Account 1010 166,083 Cash-Payroll Account 1020 0 Cash-Treasury Bills 1030 150,000 Trade Accounts Receivable 1200 26,566,100 Allowance for Doubtful Accounts 1250 1,100,000 Other Accounts Receivable 1260 0 Inventories: Raw Materials 1310 6,550,104 Inventories: Work in Process 1315 0 Inventories: Finished Goods 1320 37,117,696 Prepaid Expenses 1400 4,717,900 Land 1511 1,879,000 Buildings 1512 3,464,840 Leased Buildings 1513 3,489,988 Manufacturing Equipment 1521 14,992,700 Warehouse Equipment 1522 13,795,400 Office Equipment 1523 3,539,800 Accumulated Depreciation-Buildings 1531 3,534,647 Accumulated Depreciation-Leased Builds 1532 2,708,170 Accumulated Depreciation-Manufacturing Equipment 1533 12,693,959 Accumulated Depreciation-Warehouse Equipment 1534 4,909,542 Accumulated Depreciation-Office Equipment 1535 1,934,198 Accounts Trademarks Patents Goodwill Accumulated Amortization - Trademarks Accumulated Amortization - Patents Accumulated Amortization - Goodwill Other Assets Deferred Tax Asset Current Maturities of Leases Current Maturities of Mortgages Payable Notes Payable Accounts Payable Accrued Expenses Interest Payable-Notes Payable Interest Payable-Leases PRO LI F O OT W EAR W O R K I N G T R IAL BALAN C E - D E C E M B E R Account Preliminary Balances # Debit Credit 1540 10,129,800 1542 1,328,400 1545 8,267,700 1550 1,463,026 1552 929,608 1555 2,765,639 1600 3,284,600 1650 0 2110 2120 2200 2300 2400 2410 2411 403,123 37,995 12,800,000 3,815,900 7,769,300 0 0 31, 2 31, 2 Interest Payable-Mortgages Payable Dividends Payable Income Taxes Payable 2412 2420 2430 0 0 150,000 Long Term Lease Obligations Mortgages Payable 2510 2520 1,296,451 4,666,003 Deferred Compensation and Benefits Deferred Income Tax Liability 2600 2700 3,357,200 0 Accounts Common Stock Additional Paid in Capital Retained Earnings Prior Period Adjustment Dividends Declared PRO LI F O OT W EAR W O R K I N G T R IAL BALAN C E - D E C E M B E R Account Preliminary Balances # Debit Credit 3000 50,000 3100 22,500,000 3200 49,966,113 3220 0 3250 1,500,000 Gross Sales Sales Discounts Sales Returns & Allowances Cost of Goods Sold Advertising and Promotion Bad Debt Expense Delivery Expense Depreciation Expense-Buildings Depreciation Expense-Leased Buildings Depreciation Expense-Manufacturing Equipment Depreciation Expense-Warehouse Equipment Depreciation Expense-Office Equipment Amortization Expense - Trademarks Amortization Expense - Patents Amortization Expense - Goodwill Accounts Insurance Expense Professional Services Rent Expense Utilities Expense Repairs and Maintenance Expense Commissions Expense 5000 5100 5200 6000 7050 7100 7150 7201 7202 7203 7204 7205 7230 7232 7235 31, 2 31, 2 148,235,225 372,191 1,117,535 108,711,900 1,405,639 880,000 2,504,230 1,476,213 310,330 594,320 714,003 306,165 253,108 47,356 859,093 PRO LI F O OT W EAR W O R K I N G T R IAL BALAN C E - D E C E M B E R Account Preliminary Balances # Debit Credit 7250 501,479 7300 2,079,611 7350 1,222,480 7360 1,356,432 7380 930,464 7440 1,370,007 Salaries Expense Bonus Expense Warranty Expense Taxes and Licenses Expense Telecommunications Expense Travel & Entertainment Expense Miscellaneous Expenses Impairment Loss Gain/Loss on Sale of Plant Assets Interest Expense-Notes Payable Interest Expense-Leases Interest Expense-Mortgages Payable Interest Income Miscellaneous Non-Operating Income Other Loss Income Tax Expense Unreconciled Differences TOTALS 7450 7460 7470 7500 7550 7600 7650 7900 8100 8310 8320 8330 8400 8500 8550 8600 9000 12,284,718 100,000 292,000 259,050 2,066,900 601,115 461,694 0 0 1,181,006 217,577 485,472 0 419,100 0 1,600,000 0 287,505,199 287,505,199 W EAR ECEMBER W EAR ECEMBER 1/4 31, 2014 DEBIT CREDIT AJE # Amount AJE # Amount Audited Balances Debit Credit 2/4 31, 2014 DEBIT CREDIT AJE # Amount AJE # Amount Audited Balances Debit Credit W EAR ECEMBER W EAR ECEMBER 3/4 31, 2014 DEBIT CREDIT AJE # Amount AJE # Amount Audited Balances Debit Credit 4/4 31, 2014 DEBIT CREDIT AJE # Amount AJE # Amount Audited Balances Debit Credit Proli Footwear Time Control December 31, 2014 Section Budgeted Time Spent Working Time Spent Time with Team Working Alone 1. Creating the Permanent File 3 hours 2. Planning the Audit 5 hours 3. Cash 6 hours 4. Accounts Receivable and Sales 6 hours 5. Inventory and Accounts Payable 7 hours 6A. Property, Plant, and Equipment 5 hours 6B. Intangible Assets 4 hours 7A. Current Liabilities 4 hours 7B. Lease Liabilities 4 hours 7C. Mortgage Liabilities 3 hours 8. Finishing the Audit 3 hours 9. Drafting the Report 2 hours Team member names