Question 2

You are an auditor on the BLUE Limited (BLUE) audit engagement for the financial year ending 30 September 2019. BLUE is a large hotel company with more than 1000 hotels in Australia and Asia under a range of hotel brands. You are in the process of undertaking audit planning procedures for the BLUE audit. You have noted a number of significant risks outlined below.

BLUE’s revenue is made up of management fees earned from hotels managed by BLUE under long-term contracts with hotel owners, and from the rental of rooms and food and beverage sales from hotels owned and leased by the company directly. In hotels owned and leased directly by BLUE, the company’s practice is to confirm hotel bookings by taking credit card details and collecting payment for accommodation and incidentals at the end of a customer’s stay. You have noted an increasing incidence of corporate clients prepaying for their employees’ accommodation. These have been recorded as revenue when payment has been received.

It has also come to your attention that there have been a growing number of disputes with hotel owners in relation to the amount of management fees being charged. Management fees included a base fee, a percentage of hotel revenue, and an incentive fee based on the hotel’s profitability. Individual contracts negotiated with hotel owners include provisions for percentage increases of the base fee either annually or biannually to take effect at specific dates. Based on your initial review of the correspondence, it appears that BLUE has been applying percentage increases to the base fee charged to hotel owners prior to their effective date as contained in the contracts with individual hotel owners.

BLUE runs a hotel loyalty program which enables members of the program to earn points for every dollar spent on accommodation, food and beverages at BLUE branded hotels. These points may be redeemed at a later date for free accommodation or other benefits. BLUE records a loyalty program future redemption liability on the basis of the number of points expected to be redeemed prior to their expiry multiplied by redemption cost per point. An announcement was made on 30 May 2017 that points earned under the loyalty program would now expire in two years rather than five years from the time they are earned. BLUE’s management subsequently reduced the amount provided in the loyalty program future redemption liability by $80 million based on their estimate of the revised amount required to meet the liability given the impact of the change.

BLUE has embarked on a large-scale software development project in the current year to internally develop improved guest reservation and hotel management systems. An amount of $37 million for the year has been capitalised as software development during the year. Your initial review has revealed that this amount includes repairs and maintenance of a range of BLUE’s hardware incurred during a year.

Required

(a) Considering the information provided, determine the four key account balances and related assertions at risk. Briefly justify your answer. (4 X 5 Marks = 20 Marks)

b) Recommend one audit procedure in relation to each of the assertions identified above (4 X 2.5 Marks = 10 Marks)

A simple subsidy (s) reduces the price of a good from P to P-s. On the other hand, a voucher scheme grants to the consumer the ability to consume a stated quantity of the good (label it X1s on the horizontal axis) in exchange for the voucher (which has no cost). Assume the high school graduating class of 2018 in Columbia received a voucher that would cover all tuition and fees for either 60 hours at a community college or 30 hours at a state university.

a. Illustrate and explain why a voucher scheme would be particularly effective in encouraging the consumption of the vouchered good for consumers who would otherwise have chosen little or none of the good. The voucher has no cost to the consumer and it cannot be sold (4 points).

b. Explain how introduction of this voucher into a market where it did not exist before will affect the market price of community college or university education and the feasible budget set for the consumer

Assignment Details:

Perform the following tasks:

• Complete the reading assignment and the interactive lesson before attempting this assignment.
• Select a recent news article about a life event of an individual. It can be health related, accident related, educational, or even achievement-oriented. It will be one "slice in the lifespan of that person." For example, you might select a story of someone who has achieved a major goal in life after experiencing a debilitating accident. An example would be Nick Vujicic. Or, you could choose the story of an individual who may be suspected of a developmental disorder, and who is involved in tragedy such as James Holmes. You are encouraged to Google these individuals and read about their stories for ideas for your own selection. Write an essay (approximately 150-175 words) in the space provided in the Assignment Worksheet section on page three addressing the following questions:

1. What is happening to this individual? Give a brief summary.
2. What stage of lifespan developmental stage/age is this person experiencing (i.e. Infant, child, adolescent, or adult and the chronological age)?
3. How might have the "twig" (person) been bent? Select at least three major developmentalist assumptions such as nature/nurture, behaviorism, genetic code, sociocultural, or any other developmental concepts from your textbook and discuss how these developmental concepts may have contributed to this person's situation before, during and after the life event featured in the news article.v

Researchers from the university of Kent, UK, were interested in whether collectivist or individualist attitudes are related to one’s intent to comply with social distancing and safety guidelines during COVID-19. Participants were classified as either collectivist or individualist, and rated their intent to comply with guidelines on a scale from 1-5, where 1 is definitely not and 5 is definitely yes. Please conduct an independent-groups t test to determine if there is a significant difference in intention to comply between individualists and collectivists.

In addition, please:
- report cohen’s d
- report r^2
- conduct and interpret an F-MAX test
- include 95% confidence intervals
- report your answer in words that directly address the research question

Collective

x f

3 2

4 6

5 12

Individual

x f

1 1

2 3

3 11

4 13

5 2

Suppose we have a disease phenotype that is determined by a single gene with two alleles. Further suppose it follows a autosomal recessive mode of inheritance with reduced penetrance.

We have an individual who is unaected (does not have the disease phenotype) and whose genotype is unknown. We cross this individual with a true-breeding aected individual. How many possible genotypes can this unaected individual have at the disease locus?

A. 3.

B. 2.

C. Only 1 (due to reduced penetrance).

D. We cannot be sure.

E. 4.

In order to restructure its entertainment activities, Bear Valley University wanted an estimate of the amount of US dollars spent by all its undergraduate students on entertainment expenses.

To do so, it took a sample of 25 undergraduates. Students in the sample reported spending the following US dollar amounts for entertainment expenses last year:

(Round your answers to 2 decimal places.)

Find the point estimate for the population mean, the point estimate for the population median, and the point estimate for the population mode.

Give your opinion of the following issues associated with genetic testing:

1. Define these terms:

a. Genetics

b. Genomics

c. Pharmacogenomics

2. Privacy and Confidentiality

a. Who should have access to genetic information?

Who owns and controls it?

3. Discrimination

a. Should employers be able to require job applicants to take genetic tests as a condition of employment?

4. Equitable Access to Genomic Technologies a. Rare genetic conditions –

Who will fund the development of treatments for genetic disorders that affect a relatively small number of people?

5. Impact of Genetic Information

a. How does a person’s genetic information affect that individual and society’s perception of that individual?

A medical test has been designed to detect the presence of a certain disease. Among people who have the disease, the probability that the disease will be detected by the test is 0.93. However, the probability that the test will erroneously indicate the presence of the disease in those who do not actually have it is 0.03. It is estimated that 3% of the population who take this test have the disease. (Round your answers to three decimal places.)

(a) If the test administered to an individual is positive, what is the probability that the person actually has the disease?


(b) If an individual takes the test twice and the test is positive both times, what is the probability that the person actually has the disease? (Assume that the tests are independent.)

Today is June 30, 2020. WheeWork company owns an office building for which it paid $ 20,000,000 on January 1, 2019, and which currently has Accumulated Depreciation of $ 3,000,000. WheeWork purchased the building to create 500 "work stations" which it rented out the individuals who did not want to purchase or lease office space themself.
Historically, WheeWork was able to rent 80% of their units at a rate of $ 400 per month (i.e. $ 4,800 per year). WheeWork assumed that they would operate the building for a total of 10 years, and then sell the building on January 1, 2029 at an estimated price of $ 28,000,000.
However, the outlook for individual office rental space has changed dramatically, and now WheeWork believes that for the next eight-and-a-half years, going forward, they will only be able to rent 50% of their units ata rate of $ 300 per month (i.e. $ 3,600 per year). Further, the anticipated selling price of the building on January 1, 2029 has dropped to $ 18,000,000.
For purposes of this problem, you may assume that, as of June 30, 2020, the present value of the "rental revenue" from the building is $ 5,00,000, and the present value of the selling price of the building is $11,000,000.
Given the current environment, WheeWork's auditors have indicated that WheeWork must perform an "lmpairment Test" for the building. Based on the information provided above, in accordance with US GAAP, whatis the amount reported for the building (i.e. Acquisition Cost less any Accumulated Depreciation and Write-Downs) on WheeWork's June 30, 2020 Balance Sheet?

A.$ 16,000,000

B.$ 17,000,000

C.$ 18,000,000

D.None of the above