BRYANS PUBLISHING CASE
UNIVERSITY OF TECHNOLOGY
Internal Auditing (ACC4012)
Bryan’s Publishing Case
Question 2
BookStore Company Limited is a 100% subsidiary of Bryan’s Publishing and specializes in the publication and distribution of business text books. BookStore employs on average 50 employees and sales for financial year December 2011 exceeded $20 million. Bryan periodically sends a member of its Internal Audit Department to audit the operations of its subsidiaries. Phillip Smith is an Internal Audit staff working with Bryan’s Publishing. He previously worked at Baker’s Press Limited for over 3 years as an Internal Auditor. Phillip, who has only been working with Bryan’s Publishing for the past year, suggested to his supervisor that the company seriously consider implementing an audit committee in order to enhance independence, overall competency, efficiency of operations and transparency. He further stated that his former employers have an active committee in place for over two years.
Phillip recently completed his probation and was sent two assignments.
Assignment #1
Phillip’s first assignment was to commence planning process for a review of the revenue cycle - accounts receivables department at BookStore Company Limited. Phillip as a part of this process carried out a preliminary survey. The preliminary survey indicated that severe staff reductions at the audit location had resulted in extensive amount of overtime among accounting staff. Department members are visibly stressed and very vocal about the effects of cut backs. Accounting payrolls are nearly equal to prior years, and many key controls such as segregation of duties, are no longer in place. The accounting supervisor now performs all operations within the cash receipts and posting process, and has no time to review transactions generated by the remaining members of the department. Journal entries for the last six months since the staff reductions show increasing numbers of prior month adjustments and
Internal Auditing (ACC4012)
Bryan’s Publishing Case
Question 2
BookStore Company Limited is a 100% subsidiary of Bryan’s Publishing and specializes in the publication and distribution of business text books. BookStore employs on average 50 employees and sales for financial year December 2011 exceeded $20 million. Bryan periodically sends a member of its Internal Audit Department to audit the operations of its subsidiaries. Phillip Smith is an Internal Audit staff working with Bryan’s Publishing. He previously worked at Baker’s Press Limited for over 3 years as an Internal Auditor. Phillip, who has only been working with Bryan’s Publishing for the past year, suggested to his supervisor that the company seriously consider implementing an audit committee in order to enhance independence, overall competency, efficiency of operations and transparency. He further stated that his former employers have an active committee in place for over two years.
Phillip recently completed his probation and was sent two assignments.
Assignment #1
Phillip’s first assignment was to commence planning process for a review of the revenue cycle - accounts receivables department at BookStore Company Limited. Phillip as a part of this process carried out a preliminary survey. The preliminary survey indicated that severe staff reductions at the audit location had resulted in extensive amount of overtime among accounting staff. Department members are visibly stressed and very vocal about the effects of cut backs. Accounting payrolls are nearly equal to prior years, and many key controls such as segregation of duties, are no longer in place. The accounting supervisor now performs all operations within the cash receipts and posting process, and has no time to review transactions generated by the remaining members of the department. Journal entries for the last six months since the staff reductions show increasing numbers of prior month adjustments and