MGT321H5 Lecture Notes - Lecture 11: Engagement Letter, Cash Register, Internal Control
Document Summary
Optional tutorial: wayne"s bar and grill ltd. (wbg) private company th , 2015 lecture 11 goes down, cogs goes up to an auditor. 3 shareholders, 55% - management, 30%, 15% (30/15 are also directors), director circle once every three months. Banker would be a user for the financial statements. Revenue goes down cogs goes down (should be), but, revenue. Review f/s: cas210 preconditions engagement letter, letter from management (legal letter), bank confirmation (cash they have, confirm bank loan) Mgt: bring money in the bank at night, not reconciled to cash register internal control (and you know that sales are down) Mgt can buy the 15% sh, bv+ 10% (eg. book value of 15% is. As auditors, we have to look at incentives, fraud risk factors. Could there be a potential for decreasing income, then retained earnings is lower, and buy out shareholders (15%) at a lower price. A lot of things are paid with cash, mgt does the reconcile.
