You are a new hire at a local bank. On your first day, your boss comes to you with a problem. Due to a screw up in the legal department, new loan documents didn't include the requirement for an audit of the client's financial statements. This caused a bunch of minor inconveniences, as most clients are willing to submit audited financial statements, except one.
Stark Industries, a maker of widgets, refuses to have an audit due to the cost. Tony Stark, the CEO, believe that the audit does not add anything of value and is a waste of money. Your boss manages to convince Tony to have a third party performed an Agreed Upon Procedures (AUP) Engagement if problems are discovered by the Bank.
Your boss wants you to write up a memo for the client's files, detailing why having someone outside the company auditing the information is useful, and to provide a list of problems with the financial statements so that you can convince Tony to have the AUP Engagement performed.
Provide your boss with a memo with a memo detailing the following:
- Why having an independent third party performing an audit of financial statements is important.
- A road map for the agreed upon procedures detailing the following:
- -Valuation
- -Completeness
- -Existence
3. Procedure to test or correct the problem:
- Valuation
- Completeness
- Existence
4. What went wrong?
1h BankofHawaii Last statement: November 30.20)\" This statement: December 31 , 20)\" Total days in statement period: 31 AVOID THE CLUTTER OF PAPER BY SWITCHING TO ONLINE STATEMENTS. Statement of Account BANK OF HAWAII 1 1 1 S KING ST HONOLULU HI 96813 Bank of Hawaii IT'S EASY. JUST SIGN ON TO YOUR ONLINE BANKING ACCOUNT AND GO PAPERLESS TODAY! MEMBER FDIC. Analyzed Business Checking Beginning balance Total additions Total subtractions Ending balance 30.000 1 5.000 12.000 33,000 SWipe Wire Inc. Invoice 91-128 Texaco Place #1101-001 Kapolei HI, 96707 (555) 555-5555 Date: Dec 31, 20X1 Billed to: Stark Industries Due Date: Jan 31, 20X2 Amount: $2,000 Item Quantity Rate Amount Web Service for December 25 Hours $100 $2,500 Discount ($500) Total: $2,000.00 Make all checks payable to SWipeWire Inc.your bill Tel One for mobile services (555) 555-5555 John Tel One number Bill Number 0.0000 NY Bill Date 12/31/X1 Bill Period 12/1/X1 10 12/31/X1 Due Date 1/31/X1 Credit Limit 1500 Security Deposit 300 your account summary Previous Payments Adjustments This Bill Period Amount Payable Amount Payable Balance Charges By 10/11/2015 After 10/11/2015 56 56 359.37 359.37 paya+100 this bill period charges Amount( ? ) 1. One time charges 2. Bill period charges 300 3. Usage charges Call charges Value added services 15 13 roaming 2 4. Discounts 3.3 5. last bill period late fee 0.0000 6. Taxes 32.67 This bill period charges 359.37 Security Alert: Calls announcing lottery/ other prizes & demanding processing fees via TV recharge coupons/ other modes are fraudulent. Please ignore such calls. ..... ...... Tel One number (555) 555-5555 Ways to pay your bill Amount Due 59.37 ay from home Due Date 11/31/X1 . Pay using telcheck on TelOne. call ". ...(toll free) To make payments. kindly make crossed cheque/dd/pay order in favour of TelOne mobile no. -4585896974 cheque/dd/pay order no. Amount( () - 2. Log onto www.telone.in and . dated go to 'my account' section cash recieved TelOne outlet signature & stamp One time payment instructions 1. Give an ecs for your bank Save Environment! Discontinue paper bill & subscribe to ebill. Also get itemized bill free of cost on your account email id. 2. Give a standing instruction for charging your credit cardLOAN AGREEMENT AND PROMISSORY NOTE THIS LOAN AGREEMENT AND PROMISSORY NOTE (the \"Note\"), is made this Slst day of December, 20X1, by and among Standard Bank (hereinafter, known as "LENDER\"l and Stark Industries, a Corporation organized under the laws of the State of Hawaii (hereinafter, known as \"BORROWER\"). BORROWER and LENDER shall collectively be known herein as "the Parties". In determining the rights and duties of the Parties under this Loan Agreement, the entire document must be read as a whole. PROMISSORY NOTE FOR VALUE RECEIVED, BORROWER promises to repay to the order of LENDER, the sum of $100,000.00 dollars together with interest thereon at a rate of 5 percent (96) per annum. ADDITIONAL LOAN TERMS The BORROWER and LENDER, hereby further set forth their rights and obligations to one another under this Loan Agreement and Promissory Note and agree to be legal bound as follows: A. Principal Loan Amount $100,000.00 B. Loan Repayment Terms. BORROWER will make paymentls) to LENDER in sixty payment of $1,887. C. Loan Covenants The Borrower must maintain a current ratio 3.00 or higher. Ifthe Borrower does not maintain a current ratio, the who loan become due immediately. D. Method of Loan Payment. The BORROWER shall make all payments called for under this loan agreement by sending check or other negotiable instrument made payable to the following individual or entity at the address indicated: If LENDER gives written notice to BORRDWER that a different address shall be used for making payments under this loan agreement, BORROWER shall use the new address so given by LENDER. E. Default. The occurrence of any of the following events shall constitute a Default by the BORROWER of the terms of this loan agreement and promissory note: 1) BORROWER'S failure to pay any amount due as principal or interest on the date required under this loan agreement. 2) BORROWER seeks an order of relief under the Federal Bankruptcy laws. 3) A federal tax lien is led against the assets of BORROWER. F. Additional Provisions Regarding Default. 1) Addressee and Address to which LENDER is to give BORROWER written notice of default: N/A If BORROWER gives written notice to LENDER that a different address shall be used, LENDER shall use that address for giving notice of defauit (or any other notice called for he rein) to BORROWER. 2) Cure of Default. Upon default, LENDER shall give BORROWER written notice of default. Mailing of written notice by LENDER to BORROWER via US. Postal Service Certied Mail shall constitute prima facie evidence of delivery. BORROWER shall have 15 days after receipt of written notice of default from LENDER to cure said default. in the case of default due solely to BORROWER'S failure to make timely payment as called for in this loan agreement, BORROWER may cure the default by either: {i} making full payment of any principal and accrued interest (including interest on these amounts) whose payment to LENDER is overdue under the loan agreement and, also, the late-payment penalty described below; or (ii) release collateral to LENDER as described in paragraph B "Collateral", above. 3} Penalty for Late Payment. There shall also be imposed upon BORROWER a 2% penalty for any late payment computed upon the amount of any principal and accrued interest whose payment to LENDER is overdue under this loan agreement mfor which LENDER has delivered a notice of default to BORROWER 4) indemnification of Attorneys Fees and Out-of-Pocket Costs. Should any party materially breach this agreement, the non-breaching party shall be indemnied by the breaching party for its reasonable attorneys fees and out-ofpocket costs which in any way relate to, or were precipitated by, the breach of this agreement. The term "out-ofpocket costs", as used herein, shall not include lost prots. A default by BORROWER which is not cured within 15 days after receiving a written notice of default from LENDER constitutes a material breach of this agreement by BORROWER. Stark Industries Bank Reconciliation FPE December 31, 20X1 December Bank Statements: 33,000.00 Outstanding Checks Check # Date Payee Amount 5000 12/15/20X1 Thor-Nomics 7,000.00 (7,000.00) 5001 12/15/20X1 Green Titan Labs 13,000.00 (13,000.00) 5002 12/15/20X1 Shield of America 20,000.00 (20,000.00) 5003 12/15/20X1 Eagle Eye Inc. 11,000.00 (11,000.00) 5004 12/15/20X1 Web tech LLC 2,000.00 (2,000.00) Total: (20,000.00) Difference GL Balance: (20,000.00)STARK INDUSTIRES A/R Aging Summary As of December 31, 20X1 Tony are Current 1 - 30 31 - 60 61 - 90 > 90 TOTAL we going to Dr. Doom Labs 0.00 0.00 0.00 0.00 15,000.00 5,000.00 collect This ? Silver Surfer Inc. 0.00 5,000.00 5,000.00 5,000.00 0.00 15,000.00 X Incorporated 0.00 4,000.00 Hi Pepper, 0.00 0.00 0.00 4,000.00 Wakanda 20,000.00 0.00 0.00 0.00 0.00 20,000.00 not svu ... Murdock and Sons LLP 000 1,000.00 3,000.00 0.00 0.00 4,000.00 The Colossus Group 0.00 2,000.00 0.00 0.00 TOTAL 0.00 2,000.00 20,000.00 12,000.00 8,000.00 5,000.00 15,000.00 Allowance for Doubtful Accounts: 60,000.00 -10,000.00 0.00 0.00 0.00 0.00 -10,000.00 Net Receivable: 10,000.00 12,000.00 8,000.00 5,000.00 15,000.00 50,000.00 Tony, when did this number come from . Hi Pepper, see my email to Jarvis.M Gmail Tony Stark
Wakanda Contract ony Stark December 30, 20X1 8:00 PM To: Jarvis@tstark.com Hi Jarvis, I just got word that we will be getting the Wakanda Contract. Under the contract we will have to deliver five 3-ton widgets which will be delivered to them on November 15, 20X2. It will take some time to construct the widgets so we should put in an order for the materials now. In addition, please book half of the contract in 20X1 as we need to shore up our financials for that year. Thank you and let me know if you have any questions.m Minion In Transit A1123 Rod 1/2 A1124 Rod 3/4 A1125 Rod 2/3 B3455 Screw 3/4 B3456 Screw 3/5 B3457 Nut 1/2 B3458 Nut 1/3 Total in Transit: Raw Materials A1123 A1124 A1125 133455 B3456 Rod 1/2 Rod 3/4 Rod 2/3 Screw 3/4 Screw 3/5 B3457 Nut 1/2 B3458 Nut 1/3 Total Raw Materials: Finished Goods X294 Widget X294 X3 96 Widget X3 96 X576 Widget X576 A678 Widget A678 Total Finished Goods: Total : Inventory Listing As of December 31, 20X1 Tgrms M FOB Shipping Point S 10.00 FOB Shipping Point 5 10.00 FOB Shipping Point 5 10.00 FOB Destination $ 0.50 FOB Destination $ 0.50 FOB Destination 53 0.30 FOB Destination $ 0.30 N/A $ 10.00 N/A $ 10.00 N/A. $ 10.00 N/A 5' 0.50 N/A $ 0.50 N/A $ 0.30 N/A 33 0.30 N/A $ 3,000.00 N/A $ 3,000.00 N/A 33 3,000.00 Consignment $ 1,000.00 Amount 10 10 50 1000 100 300 900 50 100 10 100 1000 500 300 U'INDJN 69669669996966 wwwwmwm 9509mm Extention 100.00 100.00 500.00 500.00 50.00 90.00 270.00 500.00 1,000.00 100.00 50.00 500.00 150.00 90.00 6,000.00 9,000.00 6,000.00 5,000.00 5 1,610.0 $ 2,390.00 26000 $ 30,000.00 Depreciation Schedule FYE December 31, 20X0 12/31/20X0 Accumulated Number Asset Description Acq. Date Useful Life Cost Depreciation Depreciation AWN Office Furniture 1/1/1980 7.00 Computer ?? ? 6,000.00 6,000.00 1/1/1980 5.00 1,400.00 Sorting Machine ??? 1,400.00 1/1/1980 10.00 5,000.00 5,000.00 Table 1/1/1999 10.00 Vau 1,000.00 100.00 100.00 5 Chairs 1/1/1999 10.00 2,000.00 200.00 200.00 30 Workstations 1/1/1999 10.00 3,000.00 300.00 300.00 Desk 1/1/1999 10.00 600.00 60.00 60.00 New Computer 1/1/1999 10.00 1,400.00 140.00 140.00 9 Stamper 1/1/1999 10.00 8,000.00 800.00 800.00 10 Clover 1/1/1999 10.00 10,000.00 1,000.00 11 1,000.00 Sorting Machine 1/1/1999 10.00 50,000.00 5,000.00 5,000.00 12 Extruder 12/31/20XO 39.00 161,600.00 Total: 250,000.00 7,600.00 20,000.00MEMO: Other Assets To: File From: Pepper Potts Date: January XX, 20X1 Subject: Other Assets Noted $10,000 located in other assets on the financials for 20X1. Per our review of the documentation it was for works of art held by the company for investment. The foilowing is a breakdown of the items purchased: Upon looking for the art work, noted that the CEO gave the Suit of Armor to a client a few years back as token of appreciation. Per further diswssions with the CEO, decided not to adjust the books as we did not want to take the loss in the current year. STARK INDUSTIRES A/P Aging Summary As of December 31, 20X1 Current 1 - 30 31 - 60 61 -90 > 90 TOTAL Thor-Nomics 0.00 ,000.00 1,000.00 1,000.00 1,000.00 ,000.00 Green Titan Labs 0.00 5,000.00 0.00 0.00 0.00 5,000.00 Shield of America 0.00 4,000.00 0.00 0.00 0.00 4,000.00 Eagle Eye Inc. 0.00 4,000.00 0.00 0.00 0.00 4,000.00 Web tech LLC 0.00 3,000.00 3,000.00 0.00 0.00 6,000.00 Pym Group 0.00 2,000.00 0.00 0.00 0.00 2,000.00 TOTAL 0.00 24,000.00 4,000.00 1,000.00 1,000.00 30,000.00 Tony, we received three Subsequent invoices Page 1 of 1INVOICE DATE INVOICE NO The Strange Group 1/31/20X2 1054867 9818 Tech Lane Honolulu HI, 96834 (555) 555-555 INVOICE TO Stark Industries QUANTITY DESCRIPTION UNIT PRICE LINE TOTAL 5 Hours Consultation for December $100 $500 Subtotal $500.00 Sales Tax Total $500.00
