Epitome Manufacturing Case
Initial Work make sure you
INTEGRATED CASE APPLICATION –PINNACLE MANUFACTURING:
9-37 (Objectives 9-7, 9-8)
In Part I actually of the case, you performed first analytical types of procedures for Epitome (pp. 245–247). The purpose of Component II should be to identify factors influencing hazards and the relationship of hazards to review evidence. Throughout the planning phase of the audit, you hit with Pinnacle's management team and performed other planning activities. You face the following situations that you believe may be tightly related to the taxation: 1 . Your firm comes with an employee who also reads and saves articles or blog posts about problems that may have an effect on key clients. You examine an article in the file titled, " ENVIRONMENTAL PROTECTION AGENCY Regulations Stimulating Solar-Powered Engines Postponed? ” After reading the article, you understand that the regulations management is usually relying after to increase revenue of this department might not get into effect no less than ten years. Another article is titled, " Stick to Diesel Pinnacle! ” The article claims that though Pinnacle has proven by itself within the diesel powered engine industry, they lack the knowledge and people necessary to perform well in the solar-powered engine market. 2 . Anyone asks management to get a tour of the Solar-Electro services. While touring the stockroom, you notice a section of solar-powered engines that do not look like the ones advertised on Pinnacle's Web site. You ask the stockroom manager when ever those items were 1st manufactured. This individual responds simply by telling you, " I'm unsure. I've been below a year and in addition they were below when I first arrived” 3. In addition, you observe that fresh computerized production equipment has become installed at Solar-Electro. The machines have already been stamped while using words, " Product of Welburn Making, Detroit, Michigan. ” 4. During a ending up in the features director, you learn that the panel of administrators has made a decision to raise a substantial amount of debt to finance the development of a fresh manufacturing plant pertaining to the Solar-Electro division. The business also programs to make a substantial investment in modifications towards the property where the plant will be built. a few. While standing in line in a vending machine, you see a Peak vice president within the golf shirt with the words and phrases " Todd-Machinery” You are aware of the company and noticed a few of its repairmen working in the rose earlier. You tell the man you like the shirt and he responds by saying, " Thanks. My wife and I own your company, but we retain the services of people to take care of it. ” 6. After inquiry with the internal taxation team, you're certain there is significant turnover inside the internal taxation department. You conclude the turnover is merely present on the higher-level positions. 7. Although reviewing Pinnacle's long-term debt agreements, you identify a lot of restrictive covenants. Two requirements are to keep your current percentage above installment payments on your 0 and debt-to-equity under 1 . zero at all times. eight. While studying the footnotes of the previous year's monetary statements, you note that one customer, Auto-Electro, accounts for almost 15% in the company's accounts receivable equilibrium. You investigate this receivable and learn it is outstanding for several months. 9. The involvement partner from your CPA firm called today notifying you that Brian Sioux, a market specialist and senior tax manager through the firm's Ontario office, will probably be coming on-site to Pinnacle's facilities to investigate an ongoing challenge between the Irs and Peak. 10. An associate of your CPA (CERTIFIED PUBLIC ACCOUNTANT) firm, who may be currently on-site in Detroit at the Welburn division, phone calls you to see how everything will go while you are visiting Solar-Electro in Texas. On your conversation, he asks should you know everything with the the latest intercompany financial loan from Welburn to Solar-Electro. 11. During discussions while using Pinnacle control, you learn that Pinnacle staff did a tremendous amount from the construction help a building addition. The controller stated that the job was carefully coordinated together with the construction...