auditing hw
Problem # 1 (20 points) Preview Company, a diversified manufacturer, has five divisions that operate throughout the United States and Mexico. Preview has historically allowed its divisions to operate autonomously. Corporate intervention occurred only when planned results were not obtained. Corporate management has high integrity, but the boards of directors and audit committee are not very active. Preview has a policy of hiring competent people. The company has a code of conduct, but there is little monitoring of compliance by employees. Management is fairly conservative in terms of accounting principles and practices, but employee compensation packages depend highly on performance. Chip Harris is the general manager of the Fabricator Division. The Fabricator Division produces a variety of standardized parts foe small appliances. Harris has been the general manager foe the last seven years, and each year he has been able to improve the profitability of the division. He is compensated based largely on the divisions profitability. Much of the improvement in profitability has come through aggressive cost cutting, including a substantial reduction in control procedures over inventory. During the last year a new competitor has entered Fabricators markets and has offered substantial price reductions in order to grab market share. Harris has responded to the competitors actions by matching the price cuts in the hope of maintaining market share. Harris is very concerned because he cannot
Attachments
Home work Fall 2014.pdf
