l[Ctrntario Fun Space {UPS} is a privately ovmed entertainment complex. which consists of a theme park. concert venue. and marina in Lions Head. Dntario. CIFS was founded in 1935 by a group often local investors who thought a theme part: would be a great way to attract visitors to the area and boost the local economy. Over the years. lEIIFS has developed a solid reputation as a fun place for families. boating enthusiasts and concerts. However. as its facilities aged. the investors decided it was necessary to seelt additional funds. In Edit). the investors sold aorta of UPS to FFI. a large American amusement park company. The investors no longer have any active involvement with DFS and receive a dividend based upon net income. FFI is known to have high emectations for return on its investment. To motivate DFS management to run a highly protable operation. FFI implemented a bonus plan based upon net income. Also. to maintain firm oversight of its investment, FFI required UPS to send it the following monthly operational reports: expenditure to budget. sales. and the list of boats docked in the marina. In 201D. DFS decided to acid a l-foot observation wheel that would give riders in climate-controlled cars a panoramic view of the beautiful beaches. Because of its potential to attract tourists to the area. lEIIFS was able to obtain a forgivable loan from I[Zintario government. One of the conditions of the loan is that lEIIFS must maintain certain levels of employment for it) years. If CIFS does not meet those requirements anytime within that 10-year period. it must repay the entire loan. FerASFE 380i]. the loan has been recorded as a credit and is being amortized over the same period of the estimated life of the observation wheel. CIFS must supply the Ontario government with an annual employment report as well as audited nancial statements. In EDDT. when DFS completed the construction of its concert venue. it signed a Ell-year tease agreement with the concert promoter Evil Nation (EN). According to the agreement. EN will promote and operate the DFS's concert venue. and give DFS 213% of all bot-r oice and concessionary sales revenue. You are a newly hired senior auditor at "Accounting iS fuN" LLF'. a mid-size accounting firm located in the Lions Head area. This is your nn's fourth year performing DFS's financiai statements audiL You are in charge of the audit for the year ended March 31. ElS. It is now Ivtay. 2D15. Here are highlights from the DFS engagement team meeting: Prior to the 2|]1-Lt theme park season. DFS purchased and implemented a brand new point-ofsale (PBS) system. Due to delays with the supplier. lDFS was unable to procure the new system until late March. Enid. As a result. the PBS installation was completed just a day before the theme park's opening day. There was no time to perform any system tests. such as to verify the compatibility between the PBS and {JFS's accounting system. or to properly train employees. With no time to prepare. DFS cashiers and
