Question

In: Finance

Briefly discuss five elements to consider in planning the engagement for TUV.

TUV Hardware Stores is a major retailer of lumber and building products. They are privately owned but professionally managed. Recently, they took out a bank loan to build a new robotic warehouse. Debt to equity is now .2:1, and the bank has asked for financial statements. They have approached your audit firm to provide some assurance based on your excellent reputation.

Each retail store is franchised and there are no corporate-owned stores. In 2020, franchise fees are expected to be $176 million while wholesale sales to stores are expected to be $2,416 million and wholesale sales direct to major builders are expected to be $203 million. Gross profit on wholesale sales is around 5%. The franchise fee goes to such things as store support (training, point of sale inventory, pricing systems) and advertising, and a 20% profit.

TUV has operations across Canada with major warehouses in Vancouver, Winnipeg, Brampton, and St. John, New Brunswick. The new warehouse will be built in Kitchener. When it is complete, the warehouse in Brampton will be sold, likely for a large gain on sale since land prices in Brampton have soared in the last few years.

Required

Briefly discuss five elements to consider in planning the engagement for TUV.

Solutions

Expert Solution

Answer :

Since audit work is related to assurance service hence auditor should focus on all the variables having effect on audit data ; such as

1) Debt Equity Ratio

2) Assumptions for forecasting and other information

3) Risk Associated with business

4) Authenticity of value increase of in Land Price

5) Comparison with Industry Benchmark

Auditor has been appointed to provide assurance to bank regarding information provided for prospective loan. Since auditor is dealing with forecasted financial information, reasonableness of assumption shall be considered.

Due Diligence shall be conducted for the assigned work.

TÜV Rheinland Akademie provides guidance and clear orientation to enter-prises, public authorities, private institutions and individuals faced with the challenge of realising modern educational structures and introducing new learning programmes in order to improve the employability of their em-ployees and citizens.


Related Solutions

Briefly discuss five (5) ways in which economic planning can be used to reduce the economic...
Briefly discuss five (5) ways in which economic planning can be used to reduce the economic impact of global pandemics such as the Corona Virus in the future.
Briefly discuss five ways in which economic planning can be used to reduce the economic impact...
Briefly discuss five ways in which economic planning can be used to reduce the economic impact of global pandemics such as the Corona Virus in the future
Briefly discuss five (5) ways in which economic planning can be used to reduce the economic...
Briefly discuss five (5) ways in which economic planning can be used to reduce the economic impact of global pandemics such as the Corona Virus in the future. [30 marks]
Briefly discuss five (5) ways in which economic planning can be used to reduce the economic...
Briefly discuss five (5) ways in which economic planning can be used to reduce the economic impact of global pandemics such as the Corona Virus in the future. [30 marks]
Briefly discuss five (5) ways in which economic planning can be used to reduce the economic...
Briefly discuss five (5) ways in which economic planning can be used to reduce the economic impact of global pandemics such as the Corona Virus in the future. [30 marks]
  Briefly discuss five (5) ways in which economic planning can be used to reduce the economic...
  Briefly discuss five (5) ways in which economic planning can be used to reduce the economic impact of global pandemics such as the Corona Virus in the future.
Why is engagement planning so critical?
Why is engagement planning so critical?
Identity and briefly discuss five sources of risk.
Identity and briefly discuss five sources of risk.
Briefly discuss three important considerations when planning for and conducting client health teaching. Briefly discuss how...
Briefly discuss three important considerations when planning for and conducting client health teaching. Briefly discuss how to best formulate a teaching plan. What strategies should be used? Explain how you will know the teaching outcomes have been achieved. What is the most important principle to assure self-management after teaching? What is the overall responsibility and accountability of nurses in client health teaching? After class you can refine your answers and
Briefly discuss three important considerations when planning for and conducting client health teaching. Briefly discuss how...
Briefly discuss three important considerations when planning for and conducting client health teaching. Briefly discuss how to best formulate a teaching plan. What strategies should be used? Explain how you will know the teaching outcomes have been achieved. What is the most important principle to assure self-management after teaching?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT