Competition Bikes, Inc.
Competition Bikes, Inc. makes bicycles for professional and other highly accomplished riders
who compete in bike races, biathlons, and triathlons.
Sixty percent of all race winners have been victorious using a Competition Bikes, Inc.
bicycle when at least ten percent of the entrants were also using a Competition Bikes, Inc.
bicycle. This extraordinary success rate consistently is a topic of conversation among racers
and this word of mouth advertising has been effective in promoting sales. The company also
uses these statistics to promote sales, although its advertising efforts have been quite
The Main Competitor
Two Wheel Racing, Inc. is the only ...view middle of the document...
uses operating procedures
based on department and function, as applicable. The following is an excerpt from the
operating manual that outlines the process used to order and receive component parts.
“The purchasing department will issue a purchase order to the supplier based
on the monthly budget projections. Purchasing checks with three sources for
similar quality materials and selects the low bidder from the three. The
purchase order is sent to the supplier by the Purchasing Department on the
first of the projected month. Upon receipt of the goods they will be brought to
the production line for use during the month. Any unused parts are sent to
the raw materials inventory stores on the last day of the month. Purchasing
sends the supplier’s invoice to accounting and accounting writes a check to
pay the invoice. “
Competition Bikes, Inc. is required to conduct an annual audit since the company shares are
traded on the Philadelphia Stock Exchange. The following excerpt was printed in the last
annual report issued by the auditors to the shareholders.
“A material weakness is a control deficiency, or a combination of control
deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the company’s annual
or interim financial statements will not be prevented or detected on a timely
Sarbanes Oxley Compliance
Management is responsible for ensuring the internal control processes prevent material
misstatements from being reported in the financial statements. They also must provide a
Report on Internal Control that is published in the annual report. The following excerpt from
the Competition Bikes, Inc. year end report indicates no material weaknesses existed.
“The management of Competition Bikes, Inc. is responsible for establishing
and maintaining adequate internal control over financial reporting.
Competition Bikes, Inc. internal control system was designed to provide
reasonable assurance to the company’s management and board of directors
regarding the preparation and fair presentation of published financial
Competition Bikes, Inc. assessed the effectiveness of the company’s internal
control over financial reporting as of December 31, Year 8. In making this
assessment, we used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal ControlIntegrated Framework. Based on our assessment we believe that, as of
December 31, Year 8, the company’s internal control over financial reporting
is effective based on those criteria.”
MANUFACTURING LOCATIONS, DISTRIBUTION, AND PRODUCTS
Competition Bikes, Inc. currently has facilities in two locations. Company headquarters are
in San Diego, CA. There are two manufacturing facilities: one in San Diego and the other is
located in an Atlanta, GA suburb. With qualified employees in each location the company