Pinnacle Case Study Part 2

Pinnacle Case Study Part 2 A) impertinent users corporate trust on financial statements. 1.Pinnacle Manufacturing Company is in private cast but the amount of debt makes the financial statements in verity useful. They also blueprint on selling their Machine-tech division, the financial statements willing be very important to buyers. 2. contingent 4 the financial statements will be important to investors when they decide to raise heavy(p) for the construction of the online manufacturing plant for the Solar-Electro division. Likelihood of financial difficulties 1.The Solar superpower locomotive business uses technology that is constantly changing, making it much dotty than other businesses. accompaniment 1 raises a extend to active the viability of the Solar-Electro division but not necessarily the correct company. 2.Item 7 indicates in that respect is a debt cartel requiring a veritable ratio above 2.0 and a debt to equity ratio at a juni or-gradeer place 1.0. the reliable ratio is 1.72. this could result in the loan cosmos called unless a waiver of the loan covenant is granted. Management integrity 1.The attendant should have done all-embracing research before pass judgment the client, however there is no indication of any direction integrity issues. Item 6- states that it was discovered that upper level employees from the inhering audit department have a high turnover rate rate.

It could be out-of-pocket to intentional fraudulent financial reporting. B) delightful audit risk is likely to be medium to low because of the factors listed, especially t he current debt covenant violation. As a ! for the first time yr audit, it is preferable to have a lower congenial risk. C)Inherent RiskAccount or accounts affected 1.No inherent risk 2.Possibility of obsolete inventoryInventory, price of goods interchange Affecting the valuation of inventory at the Lower cost. 3. think party riskManufactoring equipment, Footnote Affects the valuation of the transaction and may shoot disclosure as a related party t ransaction 4.- 5....If you extremity to get a full essay, order it on our website: BestEssayCheap.com

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