ACCOUNTING- manufactures and sells household furniture and business furniture
Jiles Enterprises, incorporated in 1982, manufactures and sells household furniture and business furniture, such as desks, chairs, file cabinets, and computer tables. In addition, the company recently acquired a restaurant chain selling and servicing franchises on a nationwide scale. The company was previously audited by Howell & Bates, CPAs. Although Beavers hasnât yet contacted the previous auditors, Daryl McIntire, Jilesâ controller, stated the reason for the change in auditors was the failure of Howell & Bates to provide support with the new on-line computer system. In questioning McIntire about Jilesâ control structure, Beavers couldnât seem to obtain specific information â only a general assurance by the controller that the transactions are entered in batches rather than on-line. Also, the company does not maintain perpetual inventory records. Beavers finds this somewhat surprising in view of Jiles size (2013 sales of $10 million and net assets of $15 million). Also, the accounting department seems small relative to the volume of transactions processed.Identify any concerns you have based on Beaversâ preliminary study of Jiles. Discuss how your concerns might impact the 2014 audit of Jiles Enterprises.
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