The final report will consist of two parts. The first part is a summary written to the Senior Audit partner, which summarizes the work you have done, the tests you performed, and your findings. Assume you have completed all testing as planned. Choose three different items to note on the report that the findings were not as expected and detail what you did to resolve the issue.
Draft an Opinion Letter to be published and for the client. This should follow the industry standard in content and style.
Each group member should gather all audit papers and submit the completed audit package for individual grading purposes. To mirror a real world situation, you are encouraged to make any changes to earlier assignments before you hand in the final based either on feedback from the instructor or from further work of the group as the process progresses.
You will submit two documents this week
- A Word document containing the summary for the senior audit partner and the opinion letter for the client. The audit summary should reference the audit working papers in the Excel workbook.
Sheet1
General Motors | |||
Risk | Risk description | Risk impact estimation | Risk likelihood estimation |
safety | this describes the issues of accidents and human hygiene it involves programs such as behavior, compliance and technical | has led to use of safety maturity tool from rockwell automation. This is useful in assessment of self guide | this risk is likely to occur when the engineer does not wear the protective clothes while operating the machines or when he/she operates the machines carelessly or not paying attention. |
quality | this involves producing machines that are highly valuable and longlasting. This risk can cause customers to stop buying vehicles from this company | has improved the developmeny of automotive vehicles with systems that can detect location of the vehicle. It has as well led to manufacture of non durable machines | this could happen when the company is in need of producing many machines using cheaper materials hence manufacturing lower quality vehicles. |
obsolescence | this risk can cause loss of productivity in equipment and software. It also involves equipment maintenance | has led many companies to have installed base evaluation which can easily access hardware and software data easily. this service can as well provide information on where risk is | is likely to happen due to improper maintenance of materials, equipment and tools |
security | this involves sharing information and data to other companies. this risk may come due to the systems being hacked and the information stolen by hackers. | has led to the use of encryption decryption data as a security to prevent information being hacked. This has created job opportunities to the people in computer science sector. It has also caused loss to the companies | this is likely to happen when a certain company needs to get data and procedures for developing machines by hacking their systems |
competition | this is a risk between two companies developing the same vehicles | due to those companies competing and for each to be seen as the best, it has led to manufacturing of quality machines and innovation of new machines | when other company related to the the existing company is build and which develops same machine as that company hence increased competition |
economic | this is a risk which explains about the tax income after all deductions | has an impact on raising the economy of the country through tax payment. It also improves the living standard of the employees | when the company has many customers and loyal employees and pays tax then the probability for the economy to increase is likely to be high |
environment | this is a risk which describes on the location where the company is situated. Its influence to the people living there and also to the surrounding | the company has created job opportunities and thus making providing for a better community. However, due to the smoke emitted by the vehicles and machines, it has caused air pollution and water pollution due to waste from untreated sewage mixing with flowing water from rivers and lakes. The company may also impact in development of roads. | this risk is likely to occur when the owner of the company risks to build a company is his/her village and not in cities. |
Analytic Ratios
General Motors Co | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio Analysis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Year | Year – 1 | Year -2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short Term Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Ratio | 0.270 | 0.332 | 0.894 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quick Ratio | 0.674 | 0.732 | 0.682 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Ratio | 0.883 | 0.922 | 0.312 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liquidity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A/R Turnover | 0.60 | 0.65 | 0.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Days to collect A/R | 24.00 | 2 | 3.00 | 22.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Turnover | 11.85 | 1 | 3.5 | 11.94 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Days to sell Inventory | 34. | 80 | 27.50 | 26.89 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt to Equity | 2.25 | 2.45 | 2.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Times Interest Earned | 10.51 | 14.05 | 21.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profitability | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earning per Share | 0.44 | -2.44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Profit Percentage | 5.61% | 8.61% | 12.30% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit Margin | 4.91% | 4.23% | 3.89% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Return on | Assets | 2.92 | 0.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Return on Common Equity | 14.12% | 20.07% | -9.04% |
Horizontal
Summit, Inc. | ||||||||||||
Income Statement | Horizontal Analysis of Income Statement | |||||||||||
For the Year Ended December 31 | Recent Year vs Year -1 | Year -1 vs Year -2 | ||||||||||
$ Change(millions) | % Change | $ Change(millios) | ||||||||||
2015 | 2014 | 2013 | ||||||||||
Net Sales | $ 75,368,814.00 | $ 74,293,018.50 | $ 72, | 343 | -9812 | -6.67% | 1461 | 1.01% | ||||
Cost of Goods Sold | $ 54,642,390.00 | $ 53,127,749.50 | $ 50,994,082.50 | -2336 | -1.87% | 5097 | 4.25% | |||||
Gross Profit | $ 20,726,424.00 | $ 21,165,269.00 | $ 21,349,124.00 | -303 | -2.21% | -4136 | -29.34% | |||||
Operating Expenses | $ 18,588,869.00 | $ 19,066,984.50 | $ 18,620,554.00 | -10848 | -8.23% | 5677 | 3.98% | |||||
Income from Operations | $ 2,137,555.00 | $ 2,098,284.50 | $ 2,728,570.00 | -1408 | -21.12% | 7745 | 95.91% | |||||
Other Revenue and Gains | $ 600,000.00 | $ 520,000.00 | $ 450,000.00 | _ | ||||||||
Other Expenses and Losses | $ 1,690,974.00 | $ 1,669,608.50 | $ 1,648,976.50 | -1159 | -13.65% | 0.83% | ||||||
Income before Income Taxes | $ 1,046,581.00 | $ 948,676.00 | $ 1,529,593.50 | -218 | -3.53% | -3345 | -52.23% | |||||
Income taxes | $ 441,657.18 | $ 429,470.50 | $ 670, | 768 | 295 | 38.36% | -11059 | -95.89% | ||||
Net Income | $ 604,923.82 | $ 519,205.50 | $ 858,825.50 | -1335 | -20.29% | 11796 | 149.01% | |||||
Earnings per share | $ 1.21 | $ 1.04 | $ 1.72 | Earnings per share ($) | -0.96 | -21.00% | 8.13 | 147.02% | ||||
Balance Sheet | Horizontal Analysis of Balance Sheet | |||||||||||
As of December 31 | ||||||||||||
2345 | 3.56% | 453 | 12.36% | |||||||||
Current Assets | 675 | 6.87% | 5465 | 13.64% | ||||||||
Cash and Equivalents | $ 3,860,639 | $ 3,662,423 | $ 4,033,273 | 765 | 0.89% | 0.92% | ||||||
Net Receivables | $ 6,521,082 | $ 4,309,929 | $ 3,968,204 | 7876 | 3 | 2.89% | 3454 | 23.98% | ||||
Inventory | $ 16,118,011 | $ 12,768,599 | $ 12,635,752 | 6865 | 16.96% | 5435 | 14.87% | |||||
Other current assets | $ 86,139 | $ 71,603 | $ 65,871 | 456 | 3.67% | 2.67% | ||||||
Total Current Assets | $ 26,585,871 | $ 20,812,554 | $ 20,703,100 | 4 | 654 | 32.65% | 3432 | 19.90% | ||||
Property, plant, & Equip | $ 31,131,524 | $ 30,817,765 | $ 29,134,366 | 8976 | 13.78% | 4565 | 1 | 2.87% | ||||
Total Assets | $ 57,717,395 | $ 51,630,319 | $ 49,837,466 | 9876 | 23.67% | 6785 | 17.98% | |||||
Liabilities | -483 | -0.89% | 342 | 1.45% | ||||||||
Current Liabilities | -897 | -3.89% | 564 | |||||||||
Payables | $ 6,484,843 | $ 4,730,388 | $ 3,793,187 | 3456 | 21.34% | 2344 | 8.90% | |||||
Short term/current long term debt | $ 7,687,909 | $ 5,149,334 | $ 4,836,335 | -345 | -0.87% | |||||||
Other current liabilities | $ 1,033,822 | $ 883,680 | $ 841,275 | -567 | -2.67% | 2,89% | ||||||
Total current liabilities | $ 15,206,574 | $ 10,763,402 | $ 9,470,797 | -987 | -7.89% | |||||||
Long-term debt | $ 12,210,045 | $ 11,171,003 | $ 11,189,960 | – | 6754 | -5.67% | 7.56% | |||||
Total Liabilities | $ 27,416,619 | $ 21,934,405 | $ 20,660,757 | -8765 | -5.78% | 4535 | ||||||
Stockholder’s Equity | 7628 | 6.75% | 6543 | 3.90% | ||||||||
Common Stock | $ 500,000 | 8797 | 4.90% | 4536 | ||||||||
Additional PICap | $ 7,858,823 | 6759 | 4.98% | 7640 | ||||||||
Retained Earnings | $ 21,941,953 | $ 21,337,091 | $ 20,817,886 | 2.70% | 2,87% | |||||||
Total Stockholder’s Equity | $ 30,300,776 | $ 29,695,914 | $ 29,176,709 | 1.78% | 2.98% | |||||||
Total Liab & Stockholder’s Equity | 1216 | 2.12% | 4543 | 3.32% |