BILTRITE PRACTICE CASE
A Computerized Audit Practice Case
Description of the Practice Case
This case has two learning objectives. First, it provides the student an opportunity to apply auditing concepts to a “real-life” audit client. The client, Biltrite Bicycles, Inc., operates within a unique business climate and internal control environment, and the student must assess inherent risk and control risk accordingly. The case contains modules involving sampling applications, risk assessment, audit documentation, analysis of design of controls, tests of details, audit adjustments, and an audit report upon completion of the 2009 engagement. Second, the case enables the student to use the computer as an audit-assist device. The student may use the computer in the Biltrite case to both automate the fieldwork and assist in decision-making.
The case consists of modules. At the end of each module is a set of requirements. The student will need an PC and an Excel or Excel-compatible spreadsheet program, and the student should download the data files from the website www.rittenberg.swlearning.com under the tab “Student Resources.” The modules parallel the phases of a financial statement audit. Many of the modules require both qualitative and quantitative analyses. Based on narrative material and on partially completed audit documentation, the student will be asked to complete the documentation, arrive at audit conclusions, and/or answer questions relating to specific auditing standards and interpretations. The following modules make up the Biltrite case:
Assessment of inherent risk
Assessment of control risk
Control testing the sales processing subset of the revenue cycle PPS sampling—factory equipment additions
Accounts receivable aging analysis and adequacy of allowance for doubtful accounts
Sales and purchases cutoff tests
Module VII: Search for unrecorded liabilities
Module VIII: Dallas Dollar Bank—bank reconciliation
Analysis of inter-bank transfers
Analysis of marketable securities
Plant asset additions and disposals
Module XII: Estimated liability for product warranty
Module XIII: Mortgage note payable and note payable to Bank Two Module XIV: Working trial balance
Module XV: Audit report
We recommend that the modules be completed in the following order: Module I:
Module III, IV, and V:
Modules VI and VII:
Modules VIII, IX, and X:
Following Chapter 4
Following Chapter 6
Following Chapter 10*
Following Chapter 11
Following Chapter 12
Following Chapter 13
Module IV may be completed after either Chapter 10 or Chapter 14. Check with your instructor.
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A C o mp ut e r iz ed A ud it Pr act i c e C as e
Modules IV, XII and XIII: Following Chapter 14*
Following Chapter 15
Following Chapter 16
For purposes of this case, the income tax effects of audit adjustments have been ignored.
Description of the Company
Operations Biltrite was incorporated in 1970 to manufacture ten-speed touring bikes. An exercise bike was added to the product line in 1980, and mountain bikes were added in 1987.
Currently, the company makes the following products:
Grand Prix: Ten-speed touring bike
Deluxe eighteen-speed racing bike
Pike’s Peak: Twelve-speed mountain bike
Eighteen-speed deluxe mountain bike
Stationary exercise bike
All of these products are...
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