Need the answers to the biltrite case modules 14 & 15 the instructions are attached

BILTRITE PRACTICE CASE Module XIV: Working Trial Balance Upon completion of substantive audit testing, the auditor should post all audit adjustments and reclassification entries to the working trial balance and extend the audited balances. The extended balances then form the nucleus for the audited financial statements. Selected analytical procedures also should be applied at the conclusion of the audit. The results may be compared with those developed during the auditplanning phase. This approach provides added support for audit conclusions contained in the documentation. Derick has asked you to post the adjustments and reclassifications and to perform the review-phase analytical procedures. Requirements 1. The instructor's CD contains a file labeled \"AJE\" (adjusting journal entries). It contains all of the audit adjustments and reclassifications that you developed in prior modules of this practice case. At this time, your instructor will supply you with a printout of this file. Review the adjustments, which will be presented to the client as proposed audit adjustments. Derick has set the following materiality thresholds: Income statement $ 435,000 Balance sheet $1,542,270 Given these thresholds and referring to the proposed audit adjustments and reclassifications, determine whether the potential adjustments equal or exceed the income statement or balance sheet materiality threshold in the aggregate. Treat income overstatements and income understatements separately. Do not net understatements against overstatements. That is, if aggregate overstatements are $600,000 and aggregate understatements are $500,000, the adjustments should be proposed to Biltrite management, inasmuch as both exceed the income statement materiality threshold. 2. Retrieve the file labeled \"WTB.\" Post the adjustments and reclassifications to the working trial balance. Observe the following rules in making your postings: a. Post account increases as positive amounts, and post account decreases as negative amounts; b. Postings are in \"thousands of dollars,\" whereas the adjustments and reclassifications are rounded to the nearest dollar. Therefore, in posting the adjustments and reclassifications, round to the nearest $1,000. c. Enter AJE numbers as text by typing a single quote before the number \"1\" so that they do not get included in the final balance. d. Do not foot the adjustments and reclassifications columns (they will automatically be reflected in the audited column as you post them). 3. Save your file under the title \"WTB,\" then print it. 4. Retrieve the file labeled \"AUDBS.\" Using your printout of the working trial balance, enter the amounts from the audited column in the 2009 balance sheet. Calculate the percentages of individual balance sheet items and components relative to totals for 2009. 858 Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Mo du le X I V : W ork in g Tri a l Ba la nc e 5. Calculate the new ratios for 2009 based on the audited financial statements. What is the purpose of applying analytical procedures in the evaluation and review phase of the audit? Is it important to develop expectations as part of performing these final analytical procedures? 6. Print the comparative audited balance sheets together with the related ratios. Compare them with the balance sheets and ratios that you developed and printed in requirement (5b) of Module I. What conclusions can you draw regarding the comparison? 7. Retrieve the file labeled \"Budget,\" which you reviewed as part of your assignment in Module I. You will recall that the purpose for this review was to identify significant budget variances that could be the result of under- or overbudgeting, misstatements in recording data, or intentional misstatement. The auditor, of course, is concerned with the latter two possibilities. a. Substitute the audited amounts from your adjusted working trial balance for the unaudited figures in the \"Actual 12/31/09\" column. Save your file, as revised, under a new file name (e.g., \"Biltbudg\"), so as not to lose the original Module I file. Print the revised budget/actual comparison. b. Do significant variances still exist? If so, are you satisfied that the audit has resolved the causes of the significant variances? (Compare the variances resulting from this analysis with those calculated in Module I.) c. If you continue to have concerns about certain variances, what additional evidence-gathering and evaluation procedures do you suggest? Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 859 BILTRITE PRACTICE CASE Module XV of the Biltrite audit practice case contains an audit report exercise. This exercise may be completed at this time. Module XV: Audit Report The Denise Vaughan audit team completed its audit field work on February 15, 2010. A conference was held on that date involving members of the audit firm and Biltrite management. Participants in the conference were Denise Vaughan, partner in charge of the Biltrite engagement; Carolyn Volmar, audit manager; Richard Derick, in-charge auditor; Trevor Lawton, Biltrite's CEO; Gerald Groth, Biltrite's controller; and Marlene McAfee, Biltrite's treasurer. The Biltrite representatives agreed to all of the audit adjustments and reclassifications proposed by the audit team, and they agreed to reflect them in the December 31, 2009, financial statements. They also agreed to modify and/or add footnote disclosures as recommended by the audit team. At the conclusion of the conference, the audit team obtained a client representation letter from Biltrite management and presented management with a copy of the \"significant deficiencies\" letter outlining discovered internal control deficiencies. The original of this letter was sent to Biltrite's audit committee. The legal action initiated against Biltrite by Rollfast, a competitor, for alleged patent infringement, was not yet settled as of February 15. Because the letter obtained by Derick from Biltrite's outside legal counsel was inconclusive as to the probable outcome of this action, Derick requested an informal conference with the attorney handling Biltrite's case. This conference was convened on February 12, and the participants were Joel Haskins, the attorney, Gerald Groth, Denise Vaughan, and Richard Derick. Haskins exhibited a degree of pessimism that produced considerable uncertainty as to the probable outcome of the litigation. Inasmuch as the amount of loss could be quite substantial, and the probability of an unfavorable outcome was more than remote but less than likely, Groth agreed to disclose the matter in a footnote to the 2009 financial statements. Notwithstanding the liquidity problems and loan default, Biltrite has been assured by Bank Two management that the bank plans no foreclosure action, provided Biltrite can restore the minimum required bank balance and continues to earn profits. Moreover, management's expressed plans for dealing with the crisis and continued sales growth during January 2010 have convinced Denise Vaughan that an explanatory paragraph expressing substantial doubt as to continued existence is not necessary. No scope restrictions were encountered during the audit, either imposed or otherwise. Also assume that Biltrite did not change accounting principles in either 2008 or 2009. Requirements 1. Using the spreadsheet program and downloaded data, retrieve the file labeled \"Report.\" 2. Modify the report as appropriate to conform to the Biltrite audit results. 3. Print the audit report. 4. Have the audit partner sign the audit report. 917 Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it