Audit program for internal cash control
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The second page is the scenario. if you send your email address through chat i will e-mail you the rough copy that needs to be re-wrote. if completed on time with minimal errors i will have another 3-6 page paper.
ACC 405 Final Project One Scenario Posey Company
Overview
You are a financial accountant for Posey Company tasked with preparing consolidation documentation at year end. You have the following information:
December 31, 20X5
Posey Company acquired 90% of Stargell Corporation’s outstanding common stock for $1,116,900. On that date:
· The fair value of the noncontrolling interest was $124,100;
· Stargell reported common stock outstanding of $487,000, premium on common stock of
$267,000, and retained earnings of $407,000; the book values and fair values of Stargell’s assets and liabilities were equal except for land, which was worth $30,000 more than its book value.
On April 1, 20X6
· Posey issued at par $200,000 of 10% bonds directly to Stargell; interest on the bonds is payable March 31 and September 30.
On January 2, 20X7
· Posey purchased all of Stargell’s outstanding 10-year, 12% bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 2, 20X1, for 101. Interest on the bonds is payable December 31 and June 30.
Since the date it was acquired by Posey
· Stargell has sold inventory to Posey on a regular basis. The amount of such intercompany sales totaled $67,000 in 20X6 and $83,000 in 20X7, including a 30% gross profit.
· All inventory transferred in 20X6 had been resold by December 31, 20X6, except inventory for which Posey had paid $18,000 and did not resell until January 20X7.
· All inventory transferred in 20X7 had been resold at December 31, 20X7, except merchandise for which Posey had paid $16,667.
As of December 31, 20X7
· Stargell had declared but not yet paid its fourth-quarter dividend of $12,750.
· Both Posey and Stargell use straight-line depreciation and amortization, including the amortization of bond discount and premium.
· On December 31, 20X7, Posey’s management reviewed the amount attributed to goodwill as a result of its purchase of Stargell common stock and concluded that an impairment loss in the amount of $25,000 had occurred during 20X7 and should be shared proportionately between the controlling and noncontrolling interests.
· Posey uses the fully adjusted equity method to account for its investment in Stargell.
On December 31, 20X7, trial balances for Posey and Stargell appeared as follows:
Posey Company
Stargell Corporation
Item
Debit
Credit
Debit
Credit
Cash
$
49,500
$
39,000
Current Receivables
121,500
90,100
Inventory
317,000
364,900
Investment in Stargell Stock
1,243,800
Investment in Stargell Bonds
985,000
Investment in Posey Bonds
200,000
Land
1,241,000
518,000
Buildings and Equipment
2,940,000
1,915,000
Cost of Goods Sold
1,829,000
426,000
Depreciation & Amortization
184,000
65,000
Other Expenses
632,000
206,000
Dividends Declared
61,000
51,000
Accumulated Depreciation
$
1,050,000
$
597,000
Current Payables
699,190
213,000
Bonds Payable
200,000
1,000,000
Premium on Bonds Payable
3,000
Common Stock
910,000
487,000
Premium on Common Stock
610,000
267,000
Retained Earnings, January 1
2,848,950
457,000
Sales
3,010,000
801,000
Other Income
143,000
50,000
Income from Stargell Corp.
132,660
Total
$
9,603,800
$
9,603,800
$
3,875,000
$
3,875,000
ACC 411 Milestone Two Guidelines and Rubric
Overview: Careful planning is a critical part of the success of every audit. However, planning is not simply done at the beginning of the audit but is a continuous and iterative process in which the results of one stage of the audit often necessitate revisions to plans for the next stage.
Prompt: Using your analysis of the business environment of RNS from Milestone One, as well as your textbook reading on planning an audit of cash accounts, write an audit program (plan) that could be used to evaluate RNS’s internal controls for cash. Be sure your program addresses each component of internal control.
Specifically, the following critical elements must be addressed:
I. Write an audit program for internal control of cash in Word or Excel. The following components must be included:
A. Control environment
B. Risk assessment
C. Control activities
D. Information and communication
E. Monitoring
Rubric
Guidelines for Submission: You can submit your audit program using Microsoft Word or Excel.
Critical Elements
Proficient (100%)
Needs Improvement (75%)
Not Evident (0%)
Value
Audit Program: Control Environment
Writes an audit program that effectively and completely addresses the control environment component of internal control of cash
Writes an audit program for the control environment component of internal control of cash, but the program is inappropriate, incomplete, or unclear
Does not write an audit program for the control environment component of internal control of cash
18
Audit Program: Risk Assessment
Writes an audit program that effectively and completely addresses the risk assessment component of internal control of cash
Writes an audit program for the risk assessment component of the internal control of cash, but the program is inappropriate, incomplete, or unclear
Does not write an audit program for the risk assessment component of internal control of cash
18
Audit Program: Control Activities
Writes an audit program that effectively and completely addresses the control activities component of internal control of cash
Writes an audit program that addresses the control activities component of internal control of cash, but the program is inappropriate, incomplete, or unclear
Does not write an audit program that addresses the control activities component of the internal control of cash
18
Critical Elements
Proficient (100%)
Needs Improvement (75%)
Not Evident (0%)
Value
Audit Program: Information and Communication
Writes an audit program that effectively and completely addresses the information and communication component of internal control of cash
Writes an audit program that addresses the information and communication component of the internal control of cash, but the program is inappropriate, incomplete, or unclear
Does not write a program that addresses the information and communication component of the internal control of cash
18
Audit Program: Monitoring
Writes an audit program that completely and effectively addresses the monitoring component of internal control of cash
Writes an audit program that addresses the monitoring component of internal control of cash, but the program is inappropriate, incomplete, or unclear
Does not write a program to address the monitoring component of the internal control of cash
18
Articulation of Response
Submission has no major errors related to citations, grammar, spelling, syntax, or organization
Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas
Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas
10
Total
100%
