I need help with my assignment for accounting. It is to do with report analysis and hypothesis testing. A good knowledge of Excel is required for this task.

Analytical review Golden Big Burgers Part I: Background Golden Big Burgers (GB) is a hamburger food chain with 20 locations operating solely in the US. The menu offerings and store operations are largely patterned after McDonald's (MCD). GB was formed in 2005 and went public in 2009. GB's common shares are publicly traded under the ticker symbol GB and it has a December 31 year-end. All GB restaurants are based on a single-building model and have approximately the same square footage. Stores 1 through 4 are located in shopping centers near college campuses and are open 18 hours a day. Stores 5 through 20 are located on college campuses and are open 24 hours a day. GB has been a client of Best Audit Firm since it went public. Management is very control conscious and maintains a strong internal control environment. GB has received an unqualified opinion every year on its financial statements since its first audit in 2005. Assume that you are the audit senior. During a meeting with the controller to discuss operating results for the year, the controller provides you with the following summary of key financial information: Amounts in thousands 2012 2011 2010 Sales $25,780 $23,409 $22,116 Less operating expenses $20,473 $18,462 $18,163 Operating margin $ 5,307 $ 4,947 $ 3,953 Operating margin percentage 20.6% 21.1% 17.9% The controller informs you that, on an aggregated basis, GB had a very good year despite the contraction of the informal, eating-out segment of the US population brought on by the recession. The recession caused a softening of GB's sales growth in early 2012. However, GB reacted quickly and reduced its prices, which resulted in improved sales. Overall sales increased 10.1% in 2012. Additionally, operating margins were 20.6% in 2012 versus 21.1% in 2011. This slight decline in operating margins in 2012 was due to reduced pricing, but was partially offset by increased customer (guest) counts of 6.9%. Analytical review - case study part I 2013 Ernst & Young Foundation (US). All Rights Reserved. SCORE No. MM4155I1 1 The controller previously provided the audit team with disaggregated information by store for 2010, 2011 and 2012 that includes sales, expenses, operating margins and customer count by store. One of the audit staff performed limited testing on this information (see working paper A0 Financial and nonfinancial). After reviewing this information, you ask the controller whether there were any significant events or changes in the stores of which you should be aware. The controller informs you of the following: Store No. 2 was converted to a 24-hour store midyear. Store No. 15 had a fire the first week of January and was closed for two and a half months. This store was completely remodeled before it reopened; however, management did not expect that the remodel would have a notable impact on sales. Stores No. 19 and No. 20 were opened on May 1, 2012 and September 1, 2012, respectively. The chief operating officer retired in March 2012 and no successor has been identified. The controller also shares with you the following insights: The retail industry utilizes comparable sales and comparable customer counts as key performance indicators. Internally, management tracks GB's results against MCD's US operations. Because of GB's appeal to college students, its sales have grown approximately 1% faster than MCD's sales. Operating margins have been approximately 0.5% better than MCD's operating margins. This is largely due to GB's lower compensation structure, since it primarily employs part-time college students. GB's average growth in customer count visits has been in line with MCD's growth. GB's third quarter press release included a statement that 2012 sales were expected to grow by approximately 10%. Approximately 5% of this growth was due to the addition of two new stores in 2012. Despite increased pressure on pricing, total operating margin dollars were better than expected. Last year, the audit team determined the scope would be 1.5% of the operating margin ($74,000 in 2011). Differences outside of this dollar threshold of plus or minus a 5% difference from expectations were appropriately investigated. The audit manager has told you, after considering the quantitative and qualitative factors and the required degree of precision, a similar approach to determining acceptable differences from expectations is appropriate in 2012; therefore, the scope has been set at $80,000 (1.5% of $5.3 million), plus or minus a 5% difference from expectations. You review some of the audit work already completed with the audit manager. This work will impact your ability to rely on key financial (actual and budgeted sales and operating results) and nonfinancial (customer count) information by store provided in management's monthly operations report for purposes of performing your analytical review procedures. Together, you note that: Internal control testing included sales and operating expenses at the store level. No significant issues were noted as a result of this testing. Analytical review - case study part I 2013 Ernst & Young Foundation (US). All Rights Reserved. SCORE No. MM4155I1 2 The audit team evaluated the accuracy of the customer count information by tracing a representative sample of the customer count data to register receipts at selected stores as part of the internal control testing. No significant issues were noted as a result of this testing. While budget information is available, the completeness, accuracy and robustness of the process have not been tested and, therefore, this information should not be used for purposes of the analytical review. Before you begin your analytical procedures, you refresh your understanding of the objectives of analytical procedures by reading PCAOB Auditing Standard No.15, paragraph 21, which states: \"Analytical procedures consist of evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data. Analytical procedures also encompass the investigation of significant differences from expected amounts.\" Based on a recent seminar you attended, you are aware the PCAOB has identified several deficiencies in performing analytical procedures among auditors in general that you want to avoid. These include the failure to: Test the data used in analytical procedures Develop and document expectations Establish a threshold of differences requiring further investigation Follow up on unexpected differences You note that while the data available for your analytical procedures has already been tested, you will be responsible for the remaining procedures. Required: Obtain a copy of McDonald's 2011 and 2012 annual reports. Review the management discussion and analysis section. Focus on comparable sales and guest counts for McDonald's US operations and company stores' operating margins for 2011 (pages 15-16) and 2012 (pages 18-19). Note that McDonald's only considers stores that have been open at least 13 months, including those temporarily closed (such as for remodels), in its comparable information statistics. - This link will take you to McDonald's annual reports: http://www.aboutmcdonalds.com/mcd/investors.html Analytical review - case study part I 2013 Ernst & Young Foundation (US). All Rights Reserved. SCORE No. MM4155I1 3 Develop and document your expectations regarding revenues for 2012 using the working papers that one of the audit staff has set up for you (Analytical_review_case_study_part_I.xls file). Use tick marks to describe any scope (you need to establish a threshold of differences from expectations requiring further follow-up), computations and explanations needed. Your analysis should include the development and documentation of analytics that consider plausible relationships between revenue with both financial and nonfinancial data. You should use formulas as appropriate to enhance the audit quality of your work. Your working papers should address the following: - Financial data: Prepare an analysis of actual 2012 sales compared to expected sales: - At an aggregate level, develop expected sales based on an understanding of industry comparables. Document your work on working paper A6 Industry comparables. Identify if additional follow up is needed for differences from expectations that exceed your scope. - At a disaggregated level by store (document your work on working paper A2 Sales): Develop expected sales based on an understanding of industry comparables. Further modify these expected sales to reflect any company specific events. Identify if follow-up is needed for any stores where differences from expectations exceed your scope. Analytical review - case study part I 2013 Ernst & Young Foundation (US). All Rights Reserved. SCORE No. MM4155I1 4