Case Study: Burlingham Bees
Learning Objectives: After completing and discussing this case you should be able to
A) Use analytical procedures to develop expectations for revenue accounts.
B) Appreciate the degree of professional judgment involved in evaluating differences between expected and reported account balances.
C) Recognize factors that lead to precise expectations of account balances.
D) Understand the audit planning implications of using analytical procedures as substantive tests of account balances.
Required:
Question 1: Research auditing professional standards and list the requirements related to developing an expectation and conducting analytical procedures when those procedures are intended to provide substantive evidence. What are the advantages of developing an expectation at a detailed level (i.e., using disaggregated data) rather than at an overall or aggregated level?
Question 2: Using the information provided, please develop a precise expectation (i.e., using the detailed or disaggregated data provided) for ticket revenues for the 2014 fiscal year.
Question 3:
(a) What are the advantages of using analytical procedures as substantive tests?
(b) If the engagement team decides to use analytical procedures for the Bees' audit, how will the audit plan differ from prior years?
(c) Discuss whether you believe analytical procedures should be used as substantive tests for the Bees 2014 audit?
Question 4:
(a) How close does the Bees' reported ticket revenue for 2014 have to be to your expectation for you to consider reported ticket revenue reasonable or fairly stated?
(b) If reported ticket revenues were outside your "reasonableness range," what could explain the difference?
Attachment:- Case Study-Burlingham Bees.rar