1. The auditor's responsibility section of the standard unmodified opinion audit report under US GAAS states:

a) that the audit is designed to obtain reasonable assurance as to whether the financial statements are free of material misstatement whether due to fraud or error

b) that the procedures performed were specified by generally accepted auditing standards

c) that the financial statement audit includes procedures sufficient to express an opinion on whether the company's internal control over financial reporting is effective

d)all of the above

2. The standard unmodified opinion audit report under US GAAS must include the name of the audit partner responsible for issuing the audit report

True False

3. Which of the following are required to be included in an audit report under the Standards of the PCAOB?

a) the name of the audit partner responsible for the audit

b) the signature of the audit firm that issued the audit report

c) a statement that the firm is a member of the AICPA

d) all of the above

4. Which of the following statements regarding internal control over financial reporting (ICFR) for US public companies are correct?

a) management of all US public companies must assess and report on the effectiveness of their ICFR

b) certain of the largest US public companies must engage their auditor to audit and report on the effectiveness of the companies' ICFR

c) PCAOB Auditing Standard No. 5 requires that the audit of internal control be integrated with the audit of the financial statements

d) all of the above

5. The auditor identified a misstatement in the financial statements that was material but not pervasive. If management fails to correct the misstatement, the auditor's report on those financial statements should include:

a) a qualified opinion

b) an adverse opinion

c) a disclaimer of opinion

d) none of the above: the auditor is required to withdraw from the audit engagement

6. The auditor was unable to audit a portion of the financial statements that was very highly material. If the audit client insists that the auditor issue a report on those financial statements, the auditor should

a) qualify the opinion for a scope limitation

b) disclaim an opinion because of a scope limitation

c) qualify the opinion for a departure from GAAP

d) issue an unqualified opinion on the financial statements with an extra paragraph describing the reasons for the scope limitation

Hydraulics & Hydrology

Problem Statement

The Romans were exquisite water engineers, and that without having at their disposal the modern tools and the knowledge we have today. Remember that Hydraulics and Hydrology as we know it now only came to be in the 1700’ when engineers started to put a fundamental framework together that is/was based on lab experiments and theoretical approaches and principles. Until then, you just “knew”. The Romans build all sorts of hydraulic systems, from irrigation canals, to water supply infrastructure, to the famed “hot baths” of Rome, to sewer systems, you name it. They realized that if you want water for different purposes at locations that were important to you that very often you had to get the water there because it just was not available in close proximity.

One of the marvelous feats they accomplished was to build water supply systems that would run over dozens of miles to convey water from sources to locations of need, typically the towns and cities they founded in their vast empire. They managed to do so by building a lot of infrastructure that withstood time and that, almost 2000 years later, is still in place for us to marvel at. Especially the many bridges that were built to cross valleys and gorges to keep the supply line flowing as an open channel are spectacular in their construction, such as the Pont du Gard, Segovia, and Aquila aqueducts.

Task:

1. Create a small inventory of the 5 most prominent and well-known aqueducts around to this day (you make a decision on what the criteria are for the selection of the 5). Come up with some describing parameters (for sure show an image or two) such as location, total length, capacity, year of built, special features, how many bridges, building materials, etc. Be creative and decide on your own what you want to tell about them.

2. Pick one of them and carry out a hydraulic analysis. I am interested here in typical characteristics such as discharge capacity, slopes, cross sections, but also operation: how did you get the water into the aqueduct, control structures, terminal end structures, Manning’s “n”, ... But also how they were lined, how gaps between construction elements were sealed so no seepage (or losses) would occur. It would also be great if you could treat the aqueduct as a chain of: uniform, rapidly (around controls), and gradually varied flow sections. Carry out a few analyses steps and report on what happens to energy and friction grade lines in these sections, preferably of the entire length of the aqueduct.

Co-dominance, Multiple Alleles, and Sex-linkage

1. Abby is unsure of the father of her daughter, Susie, and wants a quick way to find out which of the men she has dated it could be. Her blood type is AB, and her daughter’s is B. Of the possible men Dalton, has AB type blood, Jordan has O type blood, and Wyatt has A blood. Use the clues here and for each part of this problem to see who the father is. *** Be sure to answer all parts of each question.

• For blood type, A (I^AI^A or I^Ai) and B (I^BI^B or I^Bi) blood types are dominant to O (ii), and AB (I^AI^B) is codominant, meaning that both A and B proteins are expressed.
• The gene for color vision is sex-linked on the X chromosome, and having color vision (Females: X^BX^B or X^BX^b, Males: X^BY) is dominant to being color blind (Males: X^bY, Females: X^bX^b).
  1. Give the genotypes for each individual for blood type and then for color blindness. You may not be able to figure out all parts with the information provided. Put a “?” in the position for any alleles that you cannot determine, but you should be able to put at least part of the genotypes for all individuals based on the information provided above and additional information provided in the problems below.
     1. Abby’s Genotypes
        1. Blood Type:
        2. Vision:
     2. Susie’s Genotypes
        1. Blood Type:
        2. Vision:
     3. Dalton’s Genotypes
        1. Blood Type:
        2. Vision:
     4. Jordan’s Genotypes
        1. Blood Type:
        2. Vision:
     5. Wyatt’s Genotypes
        1. Blood Type:
        2. Vision:

2. Can you tell from the information given in the word problem above who the father is? Can you at least eliminate one man? Why or Why not?

3. Wyatt insists that he cannot be the father. He provides his parents’ blood types – both are AB. Is Wyatt correct that he is not the father? How do you know? *Hint, do a cross for his parents and determine what his actual genotype is.

4. Abby is hoping that Dalton is the father. She argues that because Dalton is the only man who color blind, just like Susie, he must be the father. Who is the father (Can you tell?)? How do you know or why can’t you tell?

Evaluate the proper accounting for transactions with respect to interim and segment reporting using the accounting codification and other accounting research tools.

Scenario

CM Corporation (CMC) was founded six years ago by Phil Connor and Eric Martin. The company designs, installs, and services security systems for high-tech companies. The founders, who describe themselves as "entrepreneurial geeks," met in a computer lab when they were teenagers and found they had common interests in working on security systems for critical industries. CMC hired you as a junior accountant this year.

Lately, Connor and Martin have been working with "radio frequency identification" (RFID) technology. They have developed a detailed system designed to track inventory items using RFID tags embedded invisibly in products. This technology has numerous inventory applications in multiple industries.

One of the most basic applications is tracking manufacturing components; if tagged components "go walking" (if employees attempt to take them), companies can easily track and find them. Connor and Martin have sold their system to several high-tech companies in the area. These companies have a number of government contracts that require extensive security systems to protect sensitive data from infiltration by terrorists and others. To date, CMC's cash flow from sales and services has adequately funded its operations.

CMC expects much growth potential for its products. As a result, they are considering going public and expanding internationally in the near future. Many of the issues you will address in this course project involve researching topics involving these anticipated events.

Instructions

Connor and Martin have heard that IFRS is used internationally for financial statements, but they know very little about it. Since they will most likely be going public and expanding internationally in the near future, they are considering switching to IFRS from GAAP and would like more information. They also realize if they go public and expand their business, they will have to deal with some issues they have not had to deal with previously, such as interim and segment reporting. Prepare a research memorandum for Connor and Martin addressing their questions below:

What are the similarities between GAAP and IFRS?

What are the major differences between GAAP and IFRS?

What are the requirements for interim reporting under both GAAP and IFRS?

Are there any problems or issues associated with interim reporting?

What are the advantages and disadvantages of providing segmented reporting?

What are the requirements for segment reporting under both GAAP and IFRS? Include the definition of an operating segment.

Memorandum Mechanics should be as follows:

The body of the memorandum should be a professional presentation centered on clear and concise writing. The responses to the questions should be detailed, well researched, and specifically related to CMC's industry.

Use the FASB Codification and IFRS to address all technical accounting issues presented in the questions, being certain to reference the applicable sections of the Codification and IFRS in your report. You may quote directly from the Codification and IFRS as long as all direct quotes are included in quotation marks.

Any other sources used to support your responses should similarly be properly documented. You should have other credible sources in addition to the Codification and IFRS.

For the ASC FASB Codification content, please reference asc.fasb.org.

For the Authoritative IFRS standards content, please reference eifrs.ifrs.org.

Sugar Land Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by a MBA student. The production line would be set up in unused space (Market Value Zero) in Sugar Land’ main plant. Total cost of the machine is $350,000. The machinery has an economic life of 4 years and will be depreciated using MACRS for 3-year property class. The machine will have a salvage value of $35,000 after 4 years.

The new line will generate Sales of 1,750 units per year for 4 years and the variable cost per unit is $110 in the first year. Each unit can be sold for $210 in the first year. The sales price and variable cost are expected to increase by 3% per year due to inflation. Further, to handle the new line, the firm’s net working capital would have to increase by $30,000 at time zero (No change in NWC in years 1 through 3 and the NWC will be recouped in year 4). The firm’s tax rate is 40% and its weighted average cost of capital is 11%.

Estimate annual (Year 1 through 4) operating cash flows

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.”

Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below:

The company had an overall return on investment (ROI) of 18.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,262,500. The cost and revenue characteristics of the new product line per year would be:

Required

6. Suppose that the company’s minimum required rate of return on operating assets is 16% and that performance is evaluated using residual income.

a. Compute the Office Products Division’s residual income for this year.

b. Compute the Office Products Division’s residual income for the new product line by itself.

c. Compute the Office Products Division’s residual income for next year assuming that it performs the same as this year and adds the new product line.

d. Using the residual income approach, if you were in Dell Havasi’s position, would you accept or reject the new product line?

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.”

Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below:

The company had an overall return on investment (ROI) of 18.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,430,600. The cost and revenue characteristics of the new product line per year would be:

6. Suppose that the company’s minimum required rate of return on operating assets is 15% and that performance is evaluated using residual income.

a. Compute the Office Products Division’s residual income for this year.

b. Compute the Office Products Division’s residual income for the new product line by itself.

c. Compute the Office Products Division’s residual income for next year assuming that it performs the same as this year and adds the new product line.

Show less

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.”

Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below:

The company had an overall return on investment (ROI) of 16.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,289,300. The cost and revenue characteristics of the new product line per year would be:

6. Suppose that the company’s minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income.

a. Compute the Office Products Division’s residual income for this year.

b. Compute the Office Products Division’s residual income for the new product line by itself.

c. Compute the Office Products Division’s residual income for next year assuming that it performs the same as this year and adds the new product line.

d. Using the residual income approach, if you were in Dell Havasi’s position, would you accept or reject the new product line?

King Solomon- The Rich Farmer King Solomon is a rich farmer in Tetebia, a town in the Asou Municipal Assembly. He owns over 100,000 hectares of farmlands. However, he fears the worst might happen and wants to do some investments to secure his future and that of his children. He is contemplating several long term investments he could undertake to secure his future and that if his children. He is now 50 years old and he plans to retire in 10 years from active farm work. He expects to live for another 25 years after he retires –that is, until age 85. He heard about an investment in the financial market will help him plan his retirement well. He has no idea about financial markets and how they operate. You recently graduated and have just reported to work as an investment advisor at the brokerage firm of Cenden Ltd. King Solomon has approached your company for advice. Your boss after a discussion with King Solomon could gather the following information. King Solomon wants his first retirement payment to have the same purchasing power at the time he retires as GHȼ 40,000 has today. He wants all of his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: King Solomon realizes that the real value of his retirement income will decline year by year after he retires.) His retirement income will begin the day he retires, 10 years from today, and he will then receive 24 additional annual payments. Inflation is expected to be 5% per year from today forward. He currently has GHȼ 100,000 saved up, and he expects to earn a return on his savings of 8% per year with annual compounding. Again, he wants to have a secure university education for his lovely daughter Daisy. His daughter is now 13 years old. She plans to enroll at the University of Professional Studies, Accra in 5 years, and it should take her 4 years to complete her education. Currently, the cost per year (for everything – her food, clothing, tuition, books, transportation, and so forth) is GH¢ 12,000 per year. This cost is expected to remain constant throughout the four-year university education. The daughter recently received GH¢ 7,500 from her grandfather‟s (King David‟s) estate; this money will be invested at a rate of 8% to help meet the costs of Daisy‟s education. The rest of the costs will be met by money King Solomon will deposit in a savings account which also earns 8 percent compound interest per year. He will make 5 equal deposits into the account, one deposit per annum starting one year from now until his daughter starts university. These deposits will begin one year from now. (Assume that school fees are paid at the beginning of the year). Your firm also serves as the investment adviser for Zenzo Pharma Ltd which intends to issue bonds to finance the production of its new vaccine. The bond has a face value of GH¢10,000 at a coupon rate of 12% and a term to maturity of 10 years. The bond expects to pay coupons semi-annually. Your firm however insists on Zenzo Pharma including a call and a sinking fund provision in the bond indenture. The required rate of return on the market for bonds with similar features is 18% per annum. EXAMINER: ISAAC OFOEDA Page 5 Required b. To the nearest cedi, how much must he save during each of the next 10 years (with equal deposits being made at the end of each year, beginning a year from today) to meet his retirement goal? (Note: Neither the amount he saves nor the amount he withdraws upon retirement is a growing annuity.) c. What will be the present value of the cost of 4 years of education at the time the daughter Daisy turns 18? d. What will be the value of the GH¢ 7,500 that Daisy received from her grandfather‟s estate when she starts college at age 18? e. If King Solomon is planning to make the first of 5 deposits one year from now, how large must each deposit be for him to able to put his daughter through college? f. Explain to King Solomon what call provisions and sinking fund provisions are and how these provisions are expected to affect the risk of the bond g. Which value will you place on a bond of Zenzo Pharma Ltd?