Agree or Disagree? Explain your thoughts and add any new

It is surprising to me that the US GAAP is so different from IFRS in regard to costing concepts. If an analyst was to look at financial statements from other parts of the world and wishes to compare them to US financial statements, it is not a straightforward comparison. To me, the need for convergence is obvious -- but which way should we go and why?

Y1 Y2 X3 X4 X5 X6 X7

478 184 40 74 11 31 20

494 213 32 72 11 43 18

643 347 57 70 18 16 16

341 565 31 71 11 25 19

773 327 67 72 9 29 24

603 260 25 68 8 32 15

484 325 34 68 12 24 14

546 102 33 62 13 28 11

424 38 36 69 7 25 12

548 226 31 66 9 58 15

506 137 35 60 13 21 9

819 369 30 81 4 77 36

541 109 44 66 9 37 12

491 809 32 67 11 37 16

514 29 30 65 12 35 11

371 245 16 64 10 42 14

457 118 29 64 12 21 10

437 148 36 62 7 81 27

570 387 30 59 15 31 16

432 98 23 56 15 50 15

619 608 33 46 22 24 8

357 218 35 54 14 27 13

623 254 38 54 20 22 11

547 697 44 45 26 18 8

792 827 28 57 12 23 11

799 693 35 57 9 60 18

439 448 31 61 19 14 12

867 942 39 52 17 31 10

912 1017 27 44 21 24 9

462 216 36 43 18 23 8

859 673 38 48 19 22 10

805 989 46 57 14 25 12

652 630 29 47 19 25 9

776 404 32 50 19 21 9

919 692 39 48 16 32 11

732 1517 44 49 13 31 14

657 879 33 72 13 13 22

1419 631 43 59 14 21 13

989 1375 22 49 9 46 13

821 1139 30 54 13 27 12

1740 3545 86 62 22 18 15

815 706 30 47 17 39 11

760 451 32 45 34 15 10

936 433 43 48 26 23 12

863 601 20 69 23 7 12

783 1024 55 42 23 23 11

715 457 44 49 18 30 12

1504 1441 37 57 15 35 13

1324 1022 82 72 22 15 16

940 1244 66 67 26 18 16

Y1 = Total reported crimes per million inhabitants
Y2 = Crimes of violence reported per 100,000 inhabitants
X3 = Annual budget for the police dollars per capita
X4 =% of people 25 years old or older who finished high school
X5 =% of young people between 16 and 19 years old who do not attend high school nor have graduated from it.
X6 =% of young people between the ages of 18 and 24 who attend university
X7 =% of people with 25 years or more who achieved a 4-year university career

The attached Excel document presents the crime statistics in a city. Other important information about education is also presented.

The purpose of this exercise is to create two models of multiple linear regression where we try to predict

(1) Y1 using as predictors X3, X5, X6

(2)) Y2 using as predictors X3, X4, X7

In each case you need:

A. The model (all beta coefficients) and the interpretation of each coefficient.

B. How significant are each of the coefficients

C. The coefficient of determination of the model (R squared)

D. The interpretation of R squared

E. In case (a) predict: What will be the rate of total crimes reported per million inhabitants if $ 50 per year are assigned per capita to the police, there is a 10% of young people between 16 and 19 who do not attend the high school (they have not completed it) and there is 50% of young people between 18 and 24 years old who attend university.

F. In case (b) predict: How many crimes of violence will be reported if 20 dollars per capita per year are allocated to the police, 60% of people over 25 years old have finished high school and there are 5% of people 25 years or older who achieved a 4-year university career.

G. After doing all this analysis, draw practical conclusions about the findings made in this city.

H. If you are a counselor for the authorities in that city, please write a paragraph of recommendations to follow to try to reduce crime

There has been a five-year drought all over the US because Martians have decided to direct the sun directly for trying to destroy the earth. Martians long ago created Earth as a large planet to store their pet humans who have multiplied beyond their expectations. So the Martians have decided to start over by trying to lower the human population, especially in the US.

What type of shock would occur in the economy? Where do you see inflation and GDP growth?

What are the options that we have to solve this economic situation?

If inflation maintains it's inertia regardless of what is done above, what would be the best monetary policy? What will be the result in the short run? What is the result in the long run?

You're a consultant hired by a small company that installs GPS units in semi trucks and school buses. the company is considering investing in a project to manufacture the units themselves (instead of purchasing the new units). they've used their weighted average cost of capital (WACC) of 15 percent to determine that the project has a positive NPV of $3,000.

The CFO and CEO dont agree. the CEO doesnt believe that the WACC is the correct number because the project is risky: its a brand-new venture. The CFO argues that the WACC alread incorporates risk, and the cost of new funds at the source (debt and equity financing) is the only thing that matters.

A. what is WACC? whats the formula?who is correct? why?

B. WHat are two different approaches to determine an appropriate cost of capital that appriately accounts for the different risk? Walk us through the steps in how youwould you proceed. (keep in mind theres more than one correct answer) then identify an advantage and disadvantage of each of these approaches. Lastly, how would you determine if this project should be accepted or erejected ? (no actual computations are needed)

In this discussion, you are the IT manager for a four-year university in New Orleans, Louisiana. The IT department supports the computer network requirements for over 6,000 students, 300 faculty members, and 200 staff members – plus a conference network for distinguished guests. See Exploration 2 for tips on how to complete this discussion.

Instructions

1. In your initial response, address the following points:
   • Describe the major areas that you need to include in your Emergency Action Plan and why they are needed. Hint: Include and go beyond the minimum six areas noted in the uCertify text.
   • Does the location of the school in New Orleans impact the plan? Does the plan change if the school is in Denver?
   • Describe three of your greatest threats and how you plan to manage them.

Exploration 2:

The first task in risk management is to identify the possible risks based on location, use of Internet services, the sensitivity of the data, and the other business factors that affect the network.

Once you have a list of possible and probable emergencies, did you include a few that rarely happen, but are catastrophic to the business when they occur? These include hurricanes, tornadoes, floods due to plumbing failures or natural disasters, fire, ransomware, rootkit attacks, and more. Why do we care about location? We rarely experience hurricanes in Denver, Colorado, but we need to plan for them if our network is in Florida.

The relationship between the likelihood that a threat will occur and the impact is called Risk Exposure (RE). How often will these problems occur? When they occur, how much will it cost to address them? Our goal is to list the risks and classify them so we can prioritize them by their impact. If it is hard to assess them using specific numbers, use a scale from low, moderate, or high for probability and for impact.

The most likely candidates and the most costly problems feature prominently in our additional Emergency Action Plan sections. The plan may use brief scenarios to describe the situation, followed by what to do, who to contact, and how to evaluate the next steps to get the network back online. For example, one solution might address several risks and support a variety of use case scenarios. Cloud storage backups help to ensure data integrity in the event of equipment failure, accidental misuse, intentional internal misuse, cybersecurity threats, and to avoid a loss of data during a mass disaster.

The process of documenting a risk management and IT Disaster Recovery Plan includes listing all of the existing equipment and where the resources are located. If we cannot find it, we will struggle to fix it. Next, do we have a data backup plan (DHS, n.d.)? How do we backup the data servers and where do we store the backups? How do we handle duplicate backups and where is our off-site storage? For data backup recovery strategies, how do we access the off-site storage and cloud resources?

In the event that the IT team is no longer able to respond, we need documentation that describes the equipment, the resources, their locations, and how to bring them back online.

A common problem that IT faced in the past was the inability to restore data from backups. It is wise to test the ability to restore data from backups and to periodically assess the quality of the backups. A periodic simulation of the possible problems, as well as an audit of the Emergency Action Plan, the actions, and the countermeasures recommended in it increases the likelihood of recovering quickly from problems and restoring the network.

Identifying who to contact helps us satisfy company and federal requirements for the protection and use of data. The EAP also supports later efforts to define the budget needed to prevent risks. Lastly, it is not feasible to prevent every risk, so the EAP also helps us to document how we plan to address risks when they occur.

Common questions that we ask involve use cases based on realistic scenarios. How do we shut down network services in the event of a fire or a flood without endangering our IT team? How do we safely restore communications and network services after a power outage? Who do we contact during a disaster?

A failure to plan for emergencies may lead to a costly disruption in business services and could put the organization out of business

THAT IS EXPLORATION 2 ^ THERE IS NO NEED FOR MORE INFORMATION. YOU DON'T EVEN NEED EXPLORATION TO TO BREAK DOWN THE ACTION PLAN. THIS IS ALL THE POSSIBLE INFORMATION GIVIN ON THIS ASSIGNMENT, THERE IS NOT A NEED FOR MORE.

Company ABC has a large, wholly owned consolidated finance subsidiary. For each of the following ratios, state the effect (higher, lower, or no effect) that consolidation has on the ratio of Company ABC compared to the ratio it would have if it accounted for its finance subsidiary using the equity method. Briefly explain why each effect occurs.  
a. Debt to equity ratio
b. Return on assets
c. Times interest earned

A university surveyed recent graduates of the English department for their starting salaries. Three hundred graduates returned the survey. The average salary was $25,000. The sample standard deviation was $1,500. What is the 95% confidence interval for the mean salary of all graduates from the English department?

Which of the following is subject to unlimited personal liability?

Multiple Choice

• Partners in a general partnership

• Limited partners in a limited partnership

• Corporate shareholders

• Members of LLCs

Jennifer, a limited partner in "Raingear to Go," was dissatisfied with the performance of the business. She began attending staff meetings, working in the store, and participating in the day-to-day operations. Which of the following statements is true?

Multiple Choice

• Jennifer's actions caused the limited partnership to become a corporation.

• Jennifer's actions have no relevance because it was agreed between both the general partners and other limited partners that she was classified as a limited partner.

• Jennifer's actions changed her status from a limited partner to a general partner.

• Jennifer's actions created increased liability for the other limited partners.

When a partnership is dissolved, and the partnership has been profitable, after all assets are sold, what is the order of distribution?

Multiple Choice

• All partnership outside creditors are paid; partners who loaned money are paid; any remaining proceeds from the sale of assets are distributed pro rata among the partners based on the net amounts in their capital accounts.

• Partners who loaned money are paid; all partnership outside creditors are paid; any remaining proceeds from the sale of assets are distributed pro rata among the partners based on the net amounts in their capital accounts.

• Proceeds from the sale of assets are used to pay partners any profit to which they are entitled; partners who loaned money are paid; partnership outside creditors are paid; and any other amounts are distributed pro rata among the partners based on the net amounts in their capital accounts.

• Proceeds from the sale of assets are used to pay partners any profit to which they are entitled; partnership outside creditors are paid; partners who loaned money are paid; and any other amounts are distributed among the partners on an equal basis.

The following are liable for all prior obligations of a continuing partnership:

Multiple Choice

• continuing partners.

• withdrawing partners (if released by novation).

• new partners.

• only partners who continue and who were also responsible for incurring the obligations at issue.

Mary eats at ABC Franchise Co., a fast food restaurant, and gets food poisoning. Once she recovers, she wants to sue. She discovers, however, that ABC Franchise Co., has very few assets and little money. She really wants to sue Big Franchise Co., the company that granted the franchise to ABC Franchise Co. Which of the following is true regarding her position in regard to Big Franchise Co.?

Multiple Choice

• Big Franchise Co. is automatically liable for the torts of the entity to whom it sold a franchise, so Mary merely needs to sue Big Franchise Co. along with ABC Franchise Co.

• Big Franchise Co. cannot be held liable for the torts of the entity to whom it sold a franchise, so Mary should abandon the idea of holding Big Franchise Co. liable.

• Mary may be able to establish liability on the part of Big Franchise Co. if she can show that because of the control exercised on the part of Big Franchise Co., ABC Franchise Co. was not an independent contractor.

• Mary may be able to establish strict liability on the part of Big Franchise Co. if she can show that many of the franchises sold by Big Franchise Co. had problems with food poisoning in regard to consumers.

If a partnership is established for a term of 20 years, which of the following is true regarding the authority of a partner to continue the business beyond that time?

Multiple Choice

• An individual partner has no right to continue the partnership, and there must be unanimous agreement of all partners in order for the partnership to continue.

• An individual partner has the right to continue the partnership if a minority of the partners agree to do so.

• An individual partner has the right to continue the partnership only if a majority of the partners agree to do so.

• Partnerships are perpetual entities, so an agreement establishing a term is disregarded in the law as superfluous, and it would continue past the term as a matter of law.

Generally, if a limited partnership failed to file the proper certificate, it would be treated as a:

Multiple Choice

• sole proprietorship.

• general partnership.

• de facto limited partnership.

• limited liability company.

Which of the following is false regarding the attributes of a limited liability company?

Multiple Choice

• All 50 states have statutes that permit businesses to operate limited liability companies.

• There are restrictions on the number of members a limited liability company may have.

• Members have limited liability unless the corporate veil is pierced.

• They require the filing of articles of organization with the secretary of state.

Which of the following statements is true concerning franchises?

Multiple Choice

• The term of the franchise contract must be at least 5 years.

• Under federal law, the franchise contract must contain an assurance of the right to renew.

• Federal and state governments regulate the franchise relationship.

• Franchising is limited to the continental U.S.

Which of the following is true regarding limited partnerships?

Multiple Choice

• Limited partners are generally liable for the debts of the partnership.

• Limited partners are fiduciaries.

• Limited partners have managerial power.

• Limited partner bankruptcy does not result in dissolution.

One advantage of the corporate form over that of a partnership is that:

Multiple Choice

• partnerships are usually less profitable.

• corporations can more easily hold property over long periods of time.

• corporations do not have to worry about legal compliance issues.

• partnerships are subject to double taxation.

The Revised Uniform Partnership Act (RUPA) gives every partner:

Multiple Choice

• implied authority to bind the partnership on contracts that are usually appropriate to that business.

• the right to use the partnership's property for personal business.

• the right to expel partners at will.

• the right to add more partners at will.

A freeze-out:

Multiple Choice

• occurs when majority shareholders are excluded from key management decisions.

• can be reversed in court.

• results in the minority shareholder having little or no influence in important corporate issues such as reduction or elimination of dividends or loss of employment.

• none of the above.

Which of the following is necessary to create a partnership?

Multiple Choice

• Drafting an express agreement.

• Filing notice with the Secretary of State.

• Intending to have a relationship that the law defines as a partnership.

• Filing income tax returns as a partnership.

Which of the following is true regarding making a choice as to the appropriate form of business organization?

Multiple Choice

• Once it is formed a partnership may later be changed to a corporate form of business.

• Factors generally point to a corporation as the best form of business.

• In starting a small business, financing a corporation will be easier than financing a partnership or an individual proprietorship.

• It is unlikely that there would be adverse tax consequences involved in liquidating a corporation.

The following form of business organization limits personal liability the most:

Multiple Choice

• Sole proprietorship.

• Limited sole partnership.

• Corporation.

• General partnership.

An S corporation may not have:

Multiple Choice

• more than 75 shareholders.

• more than 100 shareholders.

• more than 1,500 shareholders.

• more than 7,500 shareholders.

You are an Audit Senior currently planning the 30 June 20X9 audit of Technology Limited, an Australian-owned company that produces and exports computer chips to China. At a recent planning meeting with Technology Limited’s senior staff, you obtained the following overview of this year’s operations:

Tight checks by Australian custom officials have delayed several shipments of computer chips. These delays have angered Chinese customers who are threatening to deduct 20% from the amounts owing as compensation for lost production time.

One of Technology Limited’s customers, Blue Chip Limited, is claiming that the latest batch of computer chips it received was found to be faulty. Blue Chip Limited is refusing to pay its account, which is allegedly seven months overdue. Technology Limited has claimed to have launched an investigation into the allegations, but as yet not been able to substantiate them. Technology Limited has suffered significant cash flow problems because another major customer, Creative Limited (Creative), is experiencing financial difficulties. As a result, Creative is taking well over 120 days to pay outstanding amounts, despite Creative’s terms of trade being payment within 30 days. Creative makes up 40 per cent of Technology Limited’s sales and the board has been reluctant to take any action that might adversely affect those sales. Consequently, Technology Limited has had to increase its dependency on its line of credit, and this has caused it to temporarily breach the debt to equity ratio required in its loan covenant with Big Bank Limited.

One of Technology Limited’s major suppliers went bankrupt one month ago, causing major product shortages. To overcome the problem, Peter James, the husband of the finance director, Natalie James, provided electronic components used in the production of computer chips to Technology Limited through his private company Norton Limited. Norton Limited demands payment in $US prior to the electronic components being supplied. There is no formal agreement in place with Peter James, however, the goods are being provided at competitive prices. You are concerned about the electronic components that Peter James’ company is supplying, because his products are new to the market and you have heard some of Technology Limited’s staff complaining that they are of poor quality.

Due to increased competitive pressure, Technology Limited has recently moved the manufacture of some of its computer chips to Bangladesh. Technology Limited saves around 25 per cent in costs compared to the equivalent Australian made items. However, the manufacturing process takes longer and on a few occasions late delivery from Bangladesh has resulted in lost sales.

Last month, a protester suffered a broken leg, allegedly because he was hit by a company truck. The protester is now suing Technology Limited for damages, claiming the contractor was in fact an employee of Technology Limited at the time of the accident, and was acting on Technology Limited’s instructions. Technology Limited is fighting the case and appears to have a reasonable chance of winning; however, the adverse publicity being generated is making the company nervous about its sales in the future.

During the period, the Australian dollar has remained steady against the Chinese Yuan, although it fell by about 3% against the US dollar. Debtors are invoiced in $US at the time of shipment, and payment is received in $US one month after the shipment is delivered. It takes around six weeks for the charter vessels to travel from Technology Limited’s shipyard at Bigmantle Bay to China. A recent downturn in the Chinese economy is affecting forward orders, which have fallen by 15%.

Prepare a memorandum to the audit manager, outlining your risk assessment relating to Technology Limited. When making your risk assessment:

(a) Identify two (2) balance sheet accounts from the information provided that are subjected to an increase in audit risk. Briefly explain what factors increase the audit risk associated with the two (2) account balances identified. In your explanation, please mention the key assertion(s) at risk of material misstatement and the components of the audit risk model affected for each account balance identified.

(b) Identify how the audit plan will be affected and recommend specific audit procedures to address the risks associated with each account balance identified.