Cas 315
This case has been adapted from the textbook (6th edition) Discussion Case Question 8-6 and Discussion Case 6-8:
You are the audit senior and your manager has asked that you complete the audit planning for TWO upcoming audits --- Equality Coffee Roasters Limited (ERC) and Office Moving and Storage Limited (OMS). Both clients have a December 31, 2013 year end. Below are some notes your manager has made on each client and has provided to you to assist with the planning. It is now the beginning of January 2014. Evaluate each client separately.
Equality Coffee Roasters Limited * The company has been in existence for 5 years and is in the business of obtaining coffee beans from around the world under a fair trade policy, roasting the beans locally and selling them to coffee shops in Ontario. Most of their sales are in the urban centres of the province. ECR's business involves obtaining raw coffee beans from coffee producing countries around the world. ECR business model is to only purchase coffee from certified fair trading plantations where the agricultural workers receive a fair wage and share of profits. Investors in ECR's shares are primarily ethical investors and mutual funds that concentrate on investing in companies that have high corporate social responsibility ratings. * Last year, the audit team uncovered an error in the ending inventory balance in the amount of $65,000 overstatement. * In discussion with the company's management, you have learned that ECR currently has about 10% of the coffee bean market in Ontario. Its coffee is considered to be a premium product because of its ethical sources but also because it purchases only the highest quality of Arabica beans and uses a special just-in-time roasting and delivery business process that puts the very best-quality product into the stores at the peak of its flavour. About 75% of its sales are to independent neighbourhood coffee shops in urban areas. ECR also sells to one major coffee
You are the audit senior and your manager has asked that you complete the audit planning for TWO upcoming audits --- Equality Coffee Roasters Limited (ERC) and Office Moving and Storage Limited (OMS). Both clients have a December 31, 2013 year end. Below are some notes your manager has made on each client and has provided to you to assist with the planning. It is now the beginning of January 2014. Evaluate each client separately.
Equality Coffee Roasters Limited * The company has been in existence for 5 years and is in the business of obtaining coffee beans from around the world under a fair trade policy, roasting the beans locally and selling them to coffee shops in Ontario. Most of their sales are in the urban centres of the province. ECR's business involves obtaining raw coffee beans from coffee producing countries around the world. ECR business model is to only purchase coffee from certified fair trading plantations where the agricultural workers receive a fair wage and share of profits. Investors in ECR's shares are primarily ethical investors and mutual funds that concentrate on investing in companies that have high corporate social responsibility ratings. * Last year, the audit team uncovered an error in the ending inventory balance in the amount of $65,000 overstatement. * In discussion with the company's management, you have learned that ECR currently has about 10% of the coffee bean market in Ontario. Its coffee is considered to be a premium product because of its ethical sources but also because it purchases only the highest quality of Arabica beans and uses a special just-in-time roasting and delivery business process that puts the very best-quality product into the stores at the peak of its flavour. About 75% of its sales are to independent neighbourhood coffee shops in urban areas. ECR also sells to one major coffee