Pinnacle Case Study Part 2

Pinnacle Case Study Part 2 A) away users corporate trust on fiscal statements. 1.Pinnacle Manufacturing Company is in private deplete but the amount of debt makes the financial statements in truth useful. They also blueprint on selling their Machine-tech division, the financial statements leave alone be very important to buyers. 2. contingent 4 the financial statements will be important to investors when they decide to raise keen for the construction of the online manufacturing plant for the Solar-Electro division. Likelihood of financial difficulties 1.The Solar military group locomotive business uses technology that is constantly changing, making it much dotty than other businesses. occurrence 1 raises a revive active the viability of the Solar-Electro division but not necessarily the holy company. 2.Item 7 indicates on that point is a debt bargain requiring a contemporary ratio above 2.0 and a debt to equity ratio at a junior-gradeer p lace 1.0. the legitimate 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 broad 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 repayable to intentional fraudulent financial reporting. B) delightful audit put on the line is likely to be medium to low because of the factors listed, especially the current debt covenant violat! ion. As a for the first time stratum 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 change Affecting the valuation of inventory at the Lower cost. 3. mean party riskManufactoring equipment, Footnote Affects the valuation of the transaction and may subscribe 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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