Just for Feet
1) High risk financial statement items for Just for feet are the outrageous increase in debt from 1998 to 1999. The disappearance in property and equipment from 1998 to 1999. Also the large decrease in inventory from 1997 to 1998 would need to be looked into. The doubling in accounts payable is also something that would need to be examined
2) Some of internal audit risks are that management was obsessive over earnings and doing anything to meet earnings expectations. Also some other problems are that management aggressively interprets accounting standards. Management also accepts high levels of risk. These all provide an environment in which employees will do what ...view middle of the document...
4) Management accepts high levels of risk. 5)- places significant emphasis on earnings. 6) - Emphasis on earnings
5) if I was Thomas Shine in this case I would feel that I was in a very awkward position because he obviously does not want to lose a big customer. He was probably pressured into believing that this would never get back to them. Not only would lying affect just for feet but it would also affect Thomas Shines Company and how his company was affected. I do not think I would do it but I will never know the extent of the relationship between the two executives.
The Leslie Fay Companies:
1) BDO Seidman should have looked more carefully at several items during their audit. First they should have looked more closely at sales because sales had a large growth rate through the late 1980’s despite slowing sales and growth in the dress industry. Second they should have looked at receivables which increase from 1988 to 1990 even though there was a massive write off in receivables when their customer allied federated department stores filed for bankruptcy. Also the COGS from 1990 to 1991 decreased despite a historical increase in their COGS year to year. Also total operating expenses dropped nearly 6% in 1990 and 1991, when every other year it increased. Inventory turnover and total asset turnover was constant from 1988 to 1991 despite the slowing sales trend in the industry.
2) Some data that I would have liked to obtain in the Leslie Fay audit would be invoices for their purchase orders in order to confirm their total accounts receivable. I would also like to see inventory statements to confim total warehouse...