The owner of ABC Co. has asked your to look into a possible issue with the company's travel expenses. They have provided you with this year and last year's financial statements and the detail for the travel expense account. You will be conducting some audit procedures for ABC Co. and analyzing the results. The company has 4 sales managers that travel on a regular basis: Catherine Ames, Brody Callina, Doug Gartner, and Ustis Soizuka. The company has issued each of these employees a company Mastercard to be used for business expenses when traveling. PROJECT REQUIREMENTS: 1-Review the financial statements given to you by the owner of ABC Co.. Based on the AICPA Code of Professional Conduct prepare a page summary of how you plan to proceed to address the owner's concerns and what specific steps you would take to audit this company.

ABC Company
Statements of Income
For the year ended December 31,						2017	2016
Net Sales (less returns & allowances)						$ 930,560	$ 875,693		6%
Cost of Goods Sold						623,543	585,625		6%
Gross Margin						307,017	290,068		6%
Operating Expenses:
Advertising						1,843	1,972		-7%
Bad Debt Expense						17,683	13,923		27%
Depreciation and Amortization						14,095	12,870		10%
Dues & Subscriptions						364	375		-3%
Insurance						2,800	2,600		8%
Licenses & Fees						300	285		5%
Marketing & Promotion						10,925	11,452		-5%
Meals and Entertainment						4,512	3,985		13%
Office Expenses						1,611	1,543		4%
Office Supplies						2,000	2,035		-2%
Salaries & Wages						45,800	42,700		7%
Professional Fees						3,700	3,500		6%
Property Taxes						1,920	1,900		1%
Rent						42,500	41,800		2%
Repairs & Maintenance						700	680		3%
Shipping Delivery						450	570		-21%
Travel Expenses						41,862	35,587		18%
Utilities						7,300	6,950		5%
Leased Equipment						4,400	4,750		-7%
Other						665	654		2%
Total Operating Expenses						205,430	190,131		8%
Operating Income						101,587	99,937		2%
Interest Expense						2,658	2,432		9%
Other Income (interest, royalties)						5,620	5,725		-2%
Income Before Taxes						104,549	103,230		1%
Income Taxes						20,910	20,646		1%
Net Income						$ 83,639	$ 82,584		1%