In the late 1970s, there was a major controversy over a dam built by the Tennessee Valley Authority called the Tellico Dam, which is located near the mouth of the Little Tennessee River. After construction was completed and almost all of the land purchases (or evictions) had been done, the Supreme Court ruled that it could not go on because of the presence in the Little Tennessee of a fish on the endangered species list called the Snail Darter. (Congress later voted to exempt the dam from the law and the dam was closed in the late fall of 1979, creating Tellico Lake.) While the economic benefits of the dam were admittedly dubious, one of the common arguments for completing the project was this: "We have spent more than $100 million to build this dam. We need to complete it because we will have wasted all this money otherwise." Please evaluate this argument from an economic point of view.

Q1. You are an audit manager of Morline & Co, a Public Accounting firm. The audit engagement partner, Joe Tan, has called you into his office to discuss a new audit client. You have been assigned to take charge of the audit for the financial year end, 31 December 2019 of Crown Hotel Group Bhd. (Crown Group) a listed company. The Group operates a chain of luxury hotels across Malaysia. As part of the expansion strategy, Crown Group has recently acquired a new hotel in Melbourne. You are very excited about auditing this luxury group of hotels, and are hoping that you may get to stay in one of the hotels during the audit.

Recently you had a meeting with Joe Tan, Datuk Paul Wong, the managing director of Crown Group, and Lisa Goh, the finance director of Crown Group. From detailed discussions with them, you note the following information:

Background information:
Crown Group owns four hotels in Malaysia namely Dolce, Corus, Korma, Morib, one hotel, Belux in Singapore and a newly acquired hotel in Melbourne namely Aston, which was acquired in September 2019. Each hotel operates through a separate legal entity, and Crown Group owns 100% of each entity. The Group prepares consolidated financial statements on an annual basis. The Head Office is located in Petaling Jaya, Malaysia.

In 2019, the Crown Group had total revenues of RM 90 million (2018: RM 80 million), and operating profits of RM 8,500,000 (2018: RM 11,000,000).

Lisa Goh explained that all the hotels have been performing well over the last year, with the exception of Hotel Belux. See notes below

Information Technology (IT)

Lisa Goh highlighted that the Crown Group relies heavily on the use of information technology (IT) and noted that approximately 96% of bookings are made online via its website. The Group invested significantly in IT over the last six months, which resulted in an extensive upgrade of its website and the development of a user-friendly app. Datuk Paul Wong said, “We have spent a significant amount of money developing our IT systems and ensuring they are secure, as the rapid increase in cybercrime in Malaysia is frightening.” This development cost was capitalised in Financial Year 2019.

Finance team

Each hotel has a finance team, including a financial controller. At the end of every month, a reporting pack is prepared by the financial controller, including a copy of the management accounts, key completed reconciliations and detailed commentary on how the hotel has met the key performance indicators for that particular month. Each reporting pack is submitted to the head office, and the group financial controller reviews them and performs additional reconciliations. The group financial controller also prepares the year-end consolidated financial statements. Lisa Goh has, however, informed you that the group financial controller resigned in November 2019 because he could not cope with the pressure of the job. She has not been able to find a suitable replacement as to date. Lisa has asked if your firm would be able to help with the finalisation of the consolidated financial statements for the year ended 31 December 2019, as her team is currently struggling to find the time needed.

New acquisition

The hotel in Melbourne, Aston was acquired in September 2019 for RM 8,500,000, and will be included in the consolidated financial statements at 31 December 2019. The purchase of the hotel was financed by a bank loan. Datuk Paul Wong explained this was a significant investment for the Crown Group and that a further RM 2 million has since been spent on capital expenditure to ensure it meets the exceptionally high standards of the Group. Datuk Paul Wong has invited the entire audit team to travel to Melbourne for the opening of the hotel in June 2020 as his guests. He has also assured the team will be treated very well while there.

Valuation of the hotel properties

The group policy is to value Land and Buildings at fair value. The calculation of fair value and the allocation of fair value to Land and Buildings requires significant judgement. Datuk Paul Wong confirmed professional valuation experts were appointed to value Land and Buildings at 31 December 2019. Land and Buildings at that date were valued at RM 110 million, representing a revaluation increase of RM 12 million.

Loans and Borrowings
During the financial year to 31 December 2019, the Group borrowed RM 10,500,000 in order to finance the purchase of the Aston, and to complete the renovation work required. The loan is repayable over 10 years and the Group must adhere to strict loan covenants. The bank requires the Group to provide management accounts on a quarterly basis, if a loan covenant is breached, the loan may be due for repayment immediately. Lisa Goh has informed you that the group is also struggling to ensure management accounts for the quarter ended 31 December 2019 will be submitted within the allocated timeframe. The amount of interest paid was extremely significant

Bonus
During the year, a new bonus scheme was introduced for both managers and directors for all the hotel within the group in order to increase revenue. The bonus is directly linked to revenue.

Advance payment
Advance deposits of 50% are collected for those booking for conferences and wedding packages.

Hotel Belux
The hotel Belux is one of the biggest in the Group, and contributes 25% of total revenue is located in Singapore. Although revenue has increased in 2019, profit has fallen significantly due to a number of “special offers” in both accommodation rates and the restaurant. Datuk Paul Wong believes the main causes for this fall are reduced gross margins (due to the successful uptake of the various special offer promotions during the year) and increasing costs (mainly driven by payroll). The number of special offers were approved by management in a bid to counter the tough economic environment within which the hotel operates and thereby increase revenue.

Required:
(i) Identify and explain to the audit partner SEVEN (7) key audit risks in respect of Crown Group.
(ii) Describe the matters Morline & Co should consider in the context of ISA 620 in order to evaluate the adequacy of the expert’s work in relation to engaging the services of a property expert to value Land and Buildings.
(iii) Evaluate the ethical issues(s) if any in respect of the Crown Group audit engagement and recommend appropriate safeguard(s).

in java Print a list of seats in a theater. Rows are numbered, columns lettered, as in 1A or 3E.

Print a space after each seat. Create a nested loop to print the following: 1A 1B 1C 1D 3A 3B 3C 3D 5A 5B 5C 5D

Mindy Lee was a software engineer who worked for a company that is known for its inventory management software suite. She specialized in designing interfaces that help a business migrate its inventory data to cloud computing. Mindy has loved the Internet since her school years; she used email and browsers before any other kid in her class. She books all her travel arrangements online, including flights, car rentals and hotel rooms. Mindy has inherited money and invested in a small hotel, the Sunrise, a 140-room independent, limited service midscale property. She has 80% ownership and her silent partner owns the other 20%, allowing Mindy total control in operating decisions. The hotel has a lot of potential, as the area in which it is located is popular with tourists. There are two similar hotels nearby. Over the years, however, it has struggled to gain market share. The previous owner, an old hotelier, had refused to consider a franchise agreement, hoping to compete on service quality and reputation. The average annual occupancy at the Sunrise for the last two years (prior to Mindy’s ownership) was 40%. The average rate for the last two years (prior to Mindy’s ownership) was $130. Mindy doesn’t pretend to know how to run a hotel’s daily operations, but is convinced that she can boost sales by embracing OTAs to sell her rooms. She pins her high hopes on working with Expedia. After her first two quarters (6 months) of being in charge, monthly occupancy has averaged 70%-a significant improvement. The hotel’s CPOR (cost per occupied room) is unchanged, at $40. Her ranking on Expedia has the hotel on the first page for guest searches. Overall hotel ADR however, has dropped significantly to $110, even before Expedia’s 25% margin is factored in. As agreed with the Expedia Market Manager, the hotel is selling its rooms at a lower rate on Expedia vs. their own website (Sunrise.com), for additional exposure. Almost all rooms are now being booked on Expedia. Even regular guests no longer use the Sunrise website.

Using case study format (see rubric), address the situation. Your submission should be 2 pages, double spaced, not including references and cover page. Here are some points to consider / incorporate: Rate parity, positioning vs comp set, distribution costs, conversion to Brand.com, service levels, ADR vs. RevPAR, GOPPAR.

As a consultant, brought in to make recommendations, what do you think Mindy should do, and why?

The cosmetics division of Valles Global Industries (VGI) sells a special type of organic perfume that is highly sought after. This perfume sells for $150 per 75 ml bottle. For many years, they have sold in Asia through a Seoul-based importer by the name of Park Beauty Products. Their contract with Park Beauty Products is up for renewal and VGI has decided to look at options. You are in charge of making a recommendation.

Option 1: Continue to sell through Park Beauty Products by selling them the perfume in bulk loads of 750 liters at a cost of $150 USD per liter. Let them handle everything at their cost.   VGI receives a net payment of $15 USD per bottle.

Option 2: Sell a license for production to SohnCo Fragrances of Seoul, Korea. They will also manage marketing and distribution of the perfume. SohnCo Fragrances will charge VGI a fixed fee of $2 million USD per year to cover marketing costs. SohnCo Fragrances will pay VGI $25 USD per bottle of VGI products it sells in Asia.

Option 3: Create a new enterprise, VGI Asia, by building a small plant for $15 million USD. Annual fixed costs are estimated to be $1.5 million USD and variable costs are $0.60 per bottle.

USD—United States Dollar

Develop a five-year forecast for each of the three options. Assume there is no inflation and do a pre-tax analysis.   Develop a cash flow forecast assuming sales remain variable at somewhere between 1, 700,000 bottles and 2,000,000 bottles per year. Make and support a recommendation as to which of the options to employ.

During the current year, Bridgeport Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Bridgeport expects will be more useful for the particular contracts that the company has to fulfill over the next couple of years. The new crane is acquired from Sarasota Manufacturing Inc., which has agreed to take the smaller equipment as trade-ins and also pay $13,000 cash to Bridgeport. The new crane cost Sarasota $173,000 to manufacture and is classified as inventory. The following information is available:

Build a conceptional model for a Hotel Management System. The solution should be presented as an ER-diagram. Base your design on the following requirements.

• The database should record information about Customer, Hotel, Booking, Rooms, Employee, Feedback, and Payments.

• A Customer has a name which consists of firstName, middleName and lastName. Customers are identified by a unique customerID. A Customer has an Address, phoneNo and email address – Customers can place any number of Bookings (including none). Customer may provide Feedback for each Booking they have placed (optional). For every Booking, a Booking has to make a Payment. Customer is associated with at least one address and multiple customer can live in the same place.

• A Room is identified by its number and has a type, and a description. – Rooms are part of a Hotel.

• A hotel is identified by it is name and address ID and has a stars rating

• A Booking is uniquely identified by a bookingId. A Booking is created by a Customer. For each booking we store a Total Amount of reserved rooms, and a price for room on the booked day, period and a Date. – A Booking is associated with one or more Rooms. For each Room in a Booking, we have to record how many of the Room type is reserved for the stay, for example (2 Queen, 1 king bedroom and a suite). A booking is a made at one hotel, some hotels may not have any booking.

• Employee is identified by an employee number. An employee works in one or more hotels. An employee has a name and address and birth year. In each hotel you have a permanent employee taking a yearly salary and temporary employee working on hourly rates.

• An Address consists of a unique addrID, street and has streetNumber, city, state and zipcode. The attributes city and state can be derived from the attribute zipcode. – There may be some Addresses which are not be associated with any Customer or Hotel.

• A Payment is identified by the Booking for which the payment was made. It consists of the amountPaid and paymentMethod (Credit Card, E-Check, etc.

Sammy Sosa was staying at the Holiday Inn Hotel in Manhattan when he tripped on a carpet that was buckled. He hit his head on a dresser and sustained severe injuries to his face. The week before, another patron of the hotel tripped on the carpet in the same room and broke her wrist as a result. The hotel management put in a work order to have the carpet fixed and it was to be repaired as soon as Mr. Sosa checked out of the room.

Greta Garbor, the hotel owner, has a franchise agreement with the Holiday Inn Corporation. The agreement allows Ms. Garbor to use the name Holiday Inn and requires that the style of the building, the furnishings, and all the equipment in the hotel conform to certain specifications. In order to repair the carpet, Ms. Garbor had to order a replacement part from a Holiday Inn authorized dealer. The replacement carpet had to conform to Holiday Inn’s specifications. It could not be delivered for ten (10) days, which delayed the repair.

According to the agreement between Ms. Garbor and Holiday Inn, Garbor is responsible for the day-to-day operations, the rates charged, and she keeps the profit after paying Holiday Inn a franchise fee. All the employees work for Garbor, although they are required to wear nametags with the Holiday Inn name and logo. Holiday Inn also provides stationary and pens with the Holiday Inn name and logo that are used by the employees and provided free of charge to the customers. The web site for this particular hotel can be accessed through the Holiday Inn platform. On Ms. Garbor’s hotel web site, the masthead says: Holiday Inn Manhattan Greta Garbor, Owner.  

Mr. Sosa is suing both Holiday Inn and Ms. Garbor for his injuries:

1. Explain why Holiday Inn should be held liable for the injuries; 2. Explain why Holiday Inn should not be held liable; 3. Do you think Holiday Inn should be held liable? Why or why not?   

Beige Book - April 18, 2018

The Federal Reserve released its regular "Beige Book." the April 18th release. Read and write a one page summarizing the details of the report. What’s happening in employment and wages, price and consumer spending, Manufacturing and Distribution, service and finance and banking in March.

Federal Reserve Bank of New York

Overall Economic Activity
Economic activity continued to expand at a modest to moderate pace across the 12 Federal Reserve Districts in March and early April. Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture, and transportation expressed concern about the newly imposed and/or proposed tariffs. Consumer spending rose in most regions, with gains noted for nonauto retail sales and tourism, but mixed results for vehicle sales. Manufacturing activity grew moderately, and demand for nonfinancial services was mostly solid. Residential construction and real estate activity expanded further, although low home inventories continued to constrain sales in several Districts. Loan demand increased, and commercial real estate activity and construction improved since the last report. Transportation services activity expanded in over half of the reporting Districts, buoyed by increases in port traffic and/or air, rail and/or trucking shipments. Agricultural conditions were little changed or worsened on net, in part due to persistent drought conditions. Contacts in the energy sector cited a pickup in activity, except in the Richmond District, where coal production was flat and natural gas production dipped slightly.

Employment and Wages
The labor market has remained tight and hiring activity has been steady. One employment agency in upstate New York noted a seasonal pickup in hiring. A major New York City agency indicated that hiring has been robust and that it is taking longer to fill jobs, particularly those requiring technical skills. Businesses noted particular shortages of tech workers, truck drivers, and skilled tradespeople. A few contacts cited difficulties in attracting young job-seekers away from major urban centers.

Business contacts in the finance and information sectors reported fairly brisk hiring activity, while those in manufacturing, wholesale trade, education & health, and leisure & hospitality indicated modest hiring, on net. Retailers continued to report declining employment. Still, firms in most service industries, including retail, said they plan to expand hiring in the months ahead, while manufacturers have scaled back hiring plans.

Businesses across all major service industries reported ongoing wage pressures. Some contacts maintained that wages had accelerated over the past year, though plans to raise wages in the months ahead were little changed. A New York City agency reports that a new law prohibiting potential employers from asking about a candidate's salary history has led candidates to demand higher pay.

Prices
Input prices have continued to rise briskly but have not accelerated further, according to contacts in most industry sectors. Still, businesses generally anticipated further increases in the months ahead. A growing proportion of service-sector contacts indicated that they were raising their selling prices--most notably, wholesalers--but manufacturers noted only modest hikes in their prices.

Among retailers, some contacts indicated that they have held prices steady, while others reported price increases. Prices for New York City hotel rooms and Broadway theater tickets picked up noticeably in March. Looking ahead, a growing proportion of businesses in manufacturing and wholesale trade said that they planned to raise their prices, while most retailers did not foresee any significant price hikes.

Consumer Spending
Retail contacts reported that sales have picked up somewhat in recent weeks but are still considered lackluster, reflecting unseasonably cold and wet weather. Retailers in upstate New York indicated that sales have strengthened but remained fairly subdued, despite strong customer traffic. A major retail chain noted that sales advanced in March, running somewhat ahead of plan and up modestly from a year ago. Inventories were generally reported to be at satisfactory levels, and retailers were moderately optimistic about the near-term outlook.

New vehicle sales in upstate New York were reported to have weakened in February but there were some signs of a rebound in March. Sales of used cars were steady to up slightly. Vehicle inventories were said to be in fairly good shape. Dealers continued to characterize retail and wholesale credit conditions as favorable. Consumer confidence in the Middle Atlantic states (NY, NJ, PA) edged up to a new multi-year high in March.

Manufacturing and Distribution
Manufacturers reported some acceleration in growth since the last report. In contrast, wholesalers indicated a pause in growth, and transportation firms reported some decline in activity. Looking ahead, manufacturers have become substantially less optimistic about the near-term outlook, while contacts in wholesale distribution and transportation have remained moderately optimistic.

Services
Reports from service-sector firms were mixed but generally pointed to little growth in activity. Contacts in professional & business services and leisure & hospitality reported modest growth, while those in the information and health & education sectors reported flat activity. Service sector businesses have grown less optimistic about the near-term outlook, most notably in the health & education sector.

Tourism in New York City has picked up since the last report. Hotels reported an increase in both revenues and occupancy rates in March. Broadway theaters indicated that business was sluggish in February and early March but picked up noticeably in the second half of the month.

Banking and Finance
Small to medium size banks in the District reported higher demand for residential mortgages, commercial mortgages, and C&I loans, and steady demand for consumer loans. Banks reported lower loan spreads for consumer loans and residential mortgages, and no change in spreads across all other loan categories. Bankers reported that both credit standards and delinquency rates were unchanged across all loan categories.

With double-digit annual percentage increases in the cost of health insurance, more and more workers are likely to lack health insurance coverage (USA Today, January 23, 2004). The following sample data provide a comparison of workers with and without health insurance coverage for small, medium, and large companies. For the purposes of this study, small companies are companies that have fewer than 100 employees. Medium companies have 100 to 999 employees, and large companies have 1000 or more employees. Sample data are reported for 50 employees of small companies, 75 employees of medium companies, and 100 employees of large companies.

1. Conduct a test of independence to determine whether employee health insurance coverage is independent of the size of the company. Use  = .05. Use Table 12.4.
   
   Compute the value of the x² test statistic (to 2 decimals).?
   
   
   The p value is ?
   
   What is your conclusion?
   Conclude health insurance coverage is not independent of the size of the company/Cannot reject the assumption that health insurance coverage and size of the company are independent
2. The USA Today article indicated employees of small companies are more likely to lack health insurance coverage. Calculate the percentages of employees without health insurance based on company size (to the nearest whole number).
   

   Small	%
   Medium	%
   Large	%

   
   
   Based on the percentages calculated above, what can you conclude?