Diamond Foods, Inc.: A Comprehensive Case in Financial Auditing

2015 ◽  
Vol 32 (1) ◽  
pp. 95-112 ◽  
Author(s):  
Mahendra R. Gujarathi
Keyword(s):  
Financial Statements ◽  
Internal Controls ◽  
Learning Objectives ◽  
Problem Solving Skills ◽  
Professional Skepticism ◽  
Capstone Course ◽  
Accounting Curriculum ◽  
Auditing Standards ◽  
External Auditor ◽  
The Cost

ABSTRACT Diamond Foods is a comprehensive case that provides an opportunity for students to apply several financial auditing concepts and professional auditing standards to a real-world context. Diamond overstated its earnings of fiscal 2010 and 2011, by 38 percent and 47 percent, respectively, by delaying recognition of the cost of walnuts acquired to later accounting periods. The case requires students to determine whether Diamond's external auditor—Deloitte & Touche, LLP (Deloitte)—fulfilled its responsibility to obtain reasonable assurance that the financial statements were free of material misstatement. Students need to determine whether Deloitte's issuance of an unqualified opinion on Diamond's financial statements and internal controls violated professional auditing standards. In addition, students are required to evaluate whether Deloitte obtained sufficient understanding of Diamond's business and industry, exercised the needed professional skepticism, and used appropriate analytical procedures to discharge its professional responsibilities. The case presents an opportunity to achieve several learning objectives, including the development of research, critical-thinking, communication, and problem-solving skills. The case is appropriate for use in a graduate or undergraduate course in financial auditing. It can also be used in a fraud examination course, or in a capstone course in the accounting curriculum.

scholarly journals PENGARUH SKEPTISME PROFESIONAL DAN PENGALAMAN AUDITOR TERHADAP KEMAMPUAN AUDITOR EKSTERNAL DALAM MENDETEKSI KECURANGAN (SURVEI PADA AUDITOR BPK RI PERWAKILAN SULAWESI UTARA)

2018 ◽  
Vol 13 (02) ◽  
Author(s):  
Monica Mokoagouw ◽  
Lintje Kalangi ◽  
Natalia Gerungai
Keyword(s):  
Linear Regression ◽  
Fraud Detection ◽  
Financial Statements ◽  
Primary Data ◽  
Professional Skepticism ◽  
Detection Ability ◽  
North Sulawesi ◽  
Competent Person ◽  
External Auditor ◽  
Positive Effect

External auditor is an independent and competent person who can examine financial statements and be responsible for the opinions given. This research aims to examine the effect of professional skepticism and auditor’s experience on fraud detection ability of external auditor. The sample in this research are all auditors who work in Badan Pemeriksa Keuangan (BPK) Republik Indonesia (The Indonesia’s Supreme Audit Institution) Reprensentative of North Sulawesi Province. The data of this research is using primary data. The data was collected  by distributing  questionnaires directly to auditors of BPK RI Representative of North Sulawesi Province. This research is using the multiple linear regression analsys with SPSS 23.  The result indicate that: 1) Professional Skepticism has positive effect towards Fraud Detection Ability of External Auditor. 2) Auditor’s Experience has positive effect towards Fraud Detection Ability of External Auditor. 3) Professional Skepticism and Auditor’s Experience simultaneously have positive effect towards Fraud Detection Ability of External Auditor. Keywords: Professional Skepticism, Auditor’s experience, Fraud Detection Ability of External Auditor

The Joint Influence of the Extent and Nature of Audit Evidence, Materiality Thresholds, and Misstatement Type on Achieved Audit Risk

2012 ◽  
Vol 31 (2) ◽  
pp. 19-41 ◽  
Author(s):  
David V. Budescu ◽  
Mark E. Peecher ◽  
Ira Solomon
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Internal Controls ◽  
Financial Statement ◽  
Audit Risk ◽  
Joint Influence ◽  
Materiality Thresholds ◽  
External Auditor ◽  
Audit Effectiveness

SUMMARY We use simulation to investigate the joint effects of materiality, evidence extent, evidence nature, and misstatement type on achieved audit risk, i.e., the risk of undetected material financial statement misstatement due to error or fraud. Our primary results are fourfold. First, contrary to conventional audit wisdom, we show that elevating the extent of testing decreases achieved audit risk only under certain conditions and may well increase it. Second, reducing materiality (attempting to perform a more precise audit) can either enhance or jeopardize audit effectiveness. Third, learning about the quality of the internal controls over financial reporting not only can help the auditor to perform an integrated audit, but also helps the auditor to reach better judgments about the extent to which and how evidence from the auditee organization's management and/or information systems may be distorted as a result of misstatement, reducing the risk that the auditor would be misled by such evidence. Fourth, when financial statements are biased intentionally due to fraud, it is especially important for the external auditor to supplement more traditional audit tests with tests that produce evidence that is less likely to be biased by management. Auditors who do not understand these four results run a heightened risk of compromising audit effectiveness.

What's Happening to Profits at Cazenovia Creations?

2013 ◽  
Vol 8 (1) ◽  
pp. 24-29 ◽  
Author(s):  
Margaret Garnsey ◽  
Andrea Hotaling
Keyword(s):  
Financial Analysis ◽  
Financial Statements ◽  
Internal Controls ◽  
Net Income ◽  
Database Query ◽  
Microsoft Access ◽  
Level Data ◽  
Query Tool ◽  
Transaction Level

ABSTRACT In this case, students assume the role of an accounting professional asked by a client to investigate why net income is not as strong as expected. The students must first analyze a set of financial statements to identify areas of possible concern. After determining the areas to investigate, the students use a database query tool to see if they can determine causes by examining transaction level data. Finally, the students are asked to professionally communicate their findings and recommendations to their client. The case provides students with experience in using query-based approaches to answering business questions. It is appropriate for students with basic query and financial analysis skills and knowledge of internal controls. A Microsoft Access database with transaction details for the final seven months of the current year as well as financial statements for the current and prior year are provided.

The Mismatch between Expectations and Realities of AS4 Audits: A Post-Implementation Research Analysis

2017 ◽  
Vol 37 (1) ◽  
pp. 1-19 ◽  
Author(s):  
Sanaz Aghazadeh ◽  
Marietta Peytcheva
Keyword(s):  
Implementation Research ◽  
Risk Premium ◽  
Cost Benefit ◽  
Multiple Methods ◽  
Material Weakness ◽  
Key Stakeholders ◽  
Auditing Standards ◽  
Equilibrium Market ◽  
The Cost ◽  
Research Analysis

SUMMARY We conduct a post-implementation research analysis of AS4, a standard guiding voluntary audits of material weakness (MW) remediation disclosures, to understand the reasons for the scarcity of AS4 audits in practice. We use multiple methods (experiments, comment letter analysis, and surveys) to understand the perspectives of key stakeholders. We find that regulators' expectations of the use of the standard did not come to fruition because an equilibrium market for active use of the standard could not be achieved; that managers desire to engage in AS4 audits for the riskier MWs but do not expect the associated costs to be high; and that auditors are reluctant to audit riskier MWs and would charge a considerable risk premium. Finally, we find that investors value AS4 audits, especially for riskier MWs, and find value in an AS4 audit for those risky MWs beyond that of the year-end audit. The overall findings of our study indicate that a mismatch in the cost-benefit functions of the key stakeholders led to a lack of AS4 audits. Our findings are important given the high costs associated with auditing standards development and approval.

scholarly journals The Impact of Supply Chain Management on Financial Performance and Responsibility Accounting Agribusiness Case from Egypt

2017 ◽  
Vol 6 (2) ◽  
pp. 136 ◽  
Author(s):  
Mohamed Ali Wahdan ◽  
Mohamed Ashraf Emam
Keyword(s):  
Supply Chain ◽  
Supply Chain Management ◽  
Financial Performance ◽  
Financial Statements ◽  
Net Income ◽  
Chain Management ◽  
Research Questions ◽  
The Cost ◽  
The Impact ◽  
Responsibility Accounting

This paper presents the impact of applying the supply chain management (SCM) on the agribusiness field to optimize productivity and decreasing cost which will have a direct impact on the net income of the organization. The main two research questions are: is there a significant impact of supply chain management on financial performance? and is there a significant relationship between supply chain management and financial performance as well as responsibility accounting? To answer the research questions, data was collected from financial statements of agribusiness case from Egypt and the survey was conducted. The findings of the study indicated that there is a significant impact of supply chain management on financial performance through enhancing the productivity, decreasing the cost and improving profitability. Moreover, applying the efficient supply chain management can improve the use of responsibility accounting through the efficient usage for the budget of the crop.

Student Attaintment of Skill Sets Through Capstone Course in Diploma in Civil Engineering Programme

2021 ◽  
Vol 8 ◽  
pp. 1-9
Author(s):  
Narita Binti Noh ◽  
Nurul Izziyantie binti Mat Noor ◽  
Syed Muhammad bin Syed Yahya ◽  
Muhammad Bazli Faliq bin Mohd Puad
Keyword(s):  
Problem Solving ◽  
Communication Skills ◽  
Civil Engineering ◽  
Lesson Plan ◽  
Problem Solving Skills ◽  
Skill Sets ◽  
Capstone Course ◽  
Main Programme ◽  
Scientific Skills ◽  
Programme Outcomes

Engineering education has become challenging compared to previous decade, the readiness of graduates before entering employement world is vital for the academician. Students are expected to possess all generic skill sets as needed by a qualified engineer including knowledge profile, engineering ability, communication, teamwork, and other relevant skills. In Malaysia, engineering graduates should possess 12 programme outcomes (PO) according to ETAC requirement, throughout the whole curriculum structure in diploma level. However, capstone course in Diploma Civil Engineering in UiTM only measures 3 main programme outcomes which are problem solving and scientific skills, communication skills, and ethics in engineering. The implementation of capstones course is reviewed for 3 consecutive semesters and student attaintment based on grade and programe outcomes is observed. This paper provides the assesment tools that had been mapped to programme outcomes through out 14 week lesson plan for final year students in Diploma Civil Engineering.This study was conducted in UiTM Pasir Gudang to measure the attainment of student’s skill set based on programme outcomes stated in the syllabus. It shows that, a graduate is considered to be good in communication skills and ethics in engineering but average in problem solving skills and scientific skills. Thus, a few recomandations have been made to improve the skills attainment among students at the faculty level.

scholarly journals Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on International Auditing and Assurance Standards Board Exposure Draft, Proposed International Standard on Auditing 315 (Revised): Identifying and Assessing the Risks of Material Misstatement and Proposed Consequential and Conforming Amendments to Other ISAs

2018 ◽  
Vol 13 (1) ◽  
pp. C1-C9 ◽  
Author(s):  
Veena Looknanan Brown ◽  
Paul J. Coram ◽  
Sean A. Dennis ◽  
Denise Dickins ◽  
Christine E. Earley ◽  
...  
Keyword(s):  
Information Technology ◽  
Financial Reporting ◽  
Data Availability ◽  
Professional Skepticism ◽  
International Standard ◽  
Auditing Standards ◽  
Explicit Recognition ◽  
Automated Tools ◽  
Tools And Techniques

SUMMARY On July 16, 2018, the International Auditing and Assurance Standards Board (the Board or IAASB) issued a request for comment on its Exposure Draft, Proposed International Standard on Auditing 315 (Revised): Identifying and Assessing the Risks of Material Misstatement and Proposed Consequential and Conforming Amendments to Other ISAs (ED-315). Major enhancements proposed include explicit recognition of the auditor's use of automated tools and techniques, requiring an understanding of an auditee's use of information technology relevant to financial reporting, acknowledging the influence of an entity's complexity on the audit plan, and increasing the emphasis on the need for professional skepticism. The comment period ended on November 2, 2018. This commentary summarizes the participating committee members' views on selected questions posed by the IAASB. Data Availability: ED-315, including questions for respondents, is available at: https://www.ifac.org/publications-resources/exposure-draft-isa-315-revised-identifying-and-assessing-risks-material.

scholarly journals ANALISIS SISTEM PENGENDALIAN INTERNAL ATAS PEMBIAYAAN MURABAHAH PADA BRI SYARIAH KC MANADO

2018 ◽  
Vol 13 (04) ◽  
Author(s):  
Ummu Almaas Khoirunnisaa ◽  
Hendrik Manossoh ◽  
Dhullo Afandi
Keyword(s):  
Control System ◽  
Internal Control ◽  
Descriptive Analysis ◽  
Internal Controls ◽  
Selling Price ◽  
Internal Control System ◽  
The Cost ◽  
Document Review ◽  
Rules Set ◽  
Collection Methods

            Murabaha is a sale and purchase agreement with the selling price of goods at cost plus an agreed profit which the seller must disclose the cost of the goods to the buyer. The purpose of this research is to analyze the internal control system applied to BRI Syariah KC Manado whether it has been effective and in accordance with the principles of COSO (Committee Of Sponsoring Organizations). Data analysis method of this research is using descriptive analysis that compares the results of observations, interviews, document analysis established by the company with existing theory. Data collection methods in this study are interviews, observation, and document review. The results shows that internal controls applied for murabahah financing at BRI Syariah KC Manado include rules set by management, organizational structure, forms and documents used in murabahah financing, recording of legitimate financing transactions, and monitoring of financing. Internal control of murabahah financing at BRI Suyariah KC Manado has been running quite well. But in application still found weaknesses that can hinder the implementation of internal controls in the company. Still found employees who do double job. This is not in accordance with the principle of COSO, where Commitment in the Competence of employees should be improved and more qualified in various areas of specialization. BRI Syariah KC Manado in applying internal controls can be affirmed and in accordance with the principles of COSO.Keywords: COSO, murabahah financing, internal control system.

scholarly journals ANALYSIS OF COST OF SALES AND SALES ON NET INCOME

2021 ◽  
Vol 9 (1) ◽  
pp. 133
Author(s):  
Muchamad Pahmi Ramdhani
Keyword(s):  
Regression Analysis ◽  
Literature Review ◽  
Hypothesis Test ◽  
Linear Regression Analysis ◽  
Financial Statements ◽  
Multiple Linear Regression Analysis ◽  
Net Income ◽  
Test Analysis ◽  
Retail Trading ◽  
The Cost

This study aims to analyze The cost of sales and sales of net income in retail trading companies listed on the Bursa Efek Indonesia. The population and sample in this study are the financial statements of 12 retail trading companies listed on the Bursa Efek Indonesia for the period 2016-2018. This research technique uses classic assumption test, multiple linear regression analysis, hypothesis test and determination coefficient test. The collection technique uses the documentation and literature review methods. And after the data was collected, the test analysis in this study was carried out with the help of IBM SPSS 26 for Windows. Based on the results of the F test that The cost of sales and sold together has a simultaneous effect on net income in 12 retail trading sub-sector trading companies listed on the Bursa Efek Indonesia.

scholarly journals FSBu 25/2018 “Accounting for Leases”   and IFRS 16 “Leases”: A comparative Analysis of Key Provisions

2020 ◽  
Vol 6 (6) ◽  
pp. 42-51
Author(s):  
V. S. Plotnikov ◽  
O. V. Plotnikova
Keyword(s):  
Structural Information ◽  
Balance Sheet ◽  
Financial Statements ◽  
Practical Significance ◽  
Accounting System ◽  
The Subject ◽  
The Cost ◽  
Lease Accounting ◽  
Comparative Description

The article is devoted to the problem of accounting reflection of rental relations, which has been the subject of discussion by professional accountants for more than 100 years. At present, more standards are devoted to this problem in world practice than to other accounting objects. Nevertheless, a number of issues remain unresolved. The methodological framework of the study is based on a comparative description of the provisions of IFRS 16 “Leases” and FSBU 25/2018 “Accounting for Leases” and includes a new institutional theory, Conceptual framework for the presentation of financial statements. The research methodology provides for the reclassification of balance sheet items, which allows for significant structural information regarding the reflection of rental objects. The analysis revealed the following differences in standards: the Russian FSBU 25/2018 unreasonably introduces accounting for leasing transactions into the financial lease accounting system; insufficiently convincingly and without proper evidence the issues of identification of financial lease accounting objects are covered. The prospective direction of accounting for financial leases is the possibility of reflecting the property transferred by the lessee as an element of the cost of financial capital, at the same time, the tenant’s long-term obligations should be recognized as existing obligations. The practical significance of the study is determined by the possibility of reducing the level of debt in the balance of the parties to the lease transaction.

Sign in / Sign up

Export Citation Format

Share Document