Reference no: EM13144988
It is common for an entity to have transactions with related entities-some of which are fully owned, some of which share common ownership but are not otherwise related, and others wher ownership is small but there is control.
Required:
a. What is a related-entity transaction? Provide examples of the parties involved in these types of transactions.
b. There are two basic procedures used iin auditing related-entity transactions. Describe these procedures and evaluate the strengths and weaknesses of each approach.
c. Tyco is a conglomerate organization that had $36 billion in revenue. In a court trial, it was alleged that the CEO of the organization used corporate funds:
- For a private birthday party (over $1 million)
- To lavishly furnish an apartment in New York City.
- To pay domestic help for taking care of the apartment.
- To make loans to key executives that were subsequently forgiven by the CEO
(i) What audit procedures would have identified these transactions?
(ii) Is it reasonable to expect an audit to uncover these types of transactions in a $36 billion company?
(iii) Should the auditor look for these types of transactions in every audit? Is it reasonable for auditors to look for such transactions?
(iv) What controls should an organization like Tyco implement to ensure that such transactions do not take place in the future?
|
Determining end of the taxable year
: Given the following partnership activity for the year, determine each partner's adjusted basis in Quick and Reddy at the end of the taxable year.
|
|
Value chain analysis to identify value-creating activities
: Conduct a Value Chain analysis to identify value-creating activities. Determine if the company has a sustainable competitive advantage, supporting your claim(s) or recommending action(s).
|
|
Find probability that cloths grabs are the wrong size
: Hanging on the rack are 4 medium, 10 large, and 6 extra-large blouses. Find the probability of each event described. The fi rst two blouses she grabs are the wrong size.
|
|
Why do not we swell when we swim
: Cells placed in a hypotonic solution will have water movement into the cell and it will swell. Why don't we swell when we swim?
|
|
Transactions with related entities-some
: It is common for an entity to have transactions with related entities-some of which are fully owned, some of which share common ownership but are not otherwise related, and others wher ownership is small but there is control.
|
|
Marketing manager recommendation
: The marketing manager has recommended that the selling price be increased by 20%, with an expected decrease of only 10% in unit sales. What would be the company's net operating income if the marketing manager's recommendation is adopted?
|
|
Compute accrual-basis net income
: Of the amount paid, $30,000 was for expenses incurred on account in 2010. In addition, Leno incurred $142,000 of expenses in 2011 which will not be paid until 2012.
|
|
Determine the present value of the lease
: Determine the present value of the lease payments at June 30, 2009 (to the nearest $000) that Blue uses to record the leased asset and lease liability.
|
|
Find probability of meeting each individual specification
: If each specification will have the same chance of being met, how large must we make the probability of meeting each individual specification?
|