New York Burlington Bees Expected Ticket Revenue Auditing Case Study Please read the case carefully at first, and then follow the Requirement document to w

New York Burlington Bees Expected Ticket Revenue Auditing Case Study Please read the case carefully at first, and then follow the Requirement document to write a 1 page paper(1.5 spaced) as the case analysis, it should be the case analysis(essay) format. Using your own words to write the case analysis. Please focus on the specific requirement, which is bold and you must follow it. Thanks Burlington Bees: Using Analytical Procedures as Substantive Tests
NOTE
Before attempting to complete Requirement 1, you should prepare a flowchart (can be informal)
that clearly indicates the ticket sales and ticket revenue recognition process. This will be VERY
different from the sales process of a wholesale company or for a retail company. Use prior
experiences you have had purchasing tickets for sporting events or musical events to help you.
Be sure to consider when in the process Burlington Bees can record revenue (refer to the revenue
recognition principle discussed in Principles or Intermediate I for assistance). I am more than
happy to help you with this paper, assuming you have attempted to flowchart the ticket process
before coming to my office.
CONTENT REQUIREMENTS
Requirement 1
Determining the occurance of revenues is very important in an audit. Write one substantive
audit procedure that does not involve an analytical procedure that would allow us to obtain
comfort over the occurance of ticket sales revenue for Burlington Bees. The audit procedure
should be detailed enough that I could send it to an audit team and have them perform it with no
questions. (7 pts)
Requirement 2
Discuss the difference in purpose of analytical procedures performed during planning and
analytical procedures performed during fieldwork/test work. (3 pts)
Requirement 3
Describe an analytical procedure you might do during planning to test Burlington Bees’ ticket
sales revenue for the current year. You do not actually have to perform the procedure; just
document how you would go about it and what you would hope to learn. (6 pts)
Requirement 4
Calculate a reasonably precise estimate of ticket sales revenue using the information provided in
the case. (I want your calculation details. You can handwrite the calculation, and this page will
not be included as part of the page limit.) (10 pts)
Requirement 5
Assume that reported ticket revenue on the income statement was $2,829,477. Compare your
estimate from Requirement 5 to the reported revenue, and conclude on the reasonableness of
reported revenue. Give two plausible explanations for the difference between your estimate and
the reported revenue. (10 pts)
WRITING REQUIREMENTS
Requirement 1
Research the appropriate use of “effect” and “affect” and use each in your paper. You
must use each one at least once. Underline them, bold them, or italicize them so I can find
them easily. (2 pts)
1
Requirement 2
Use “to”, “too”, and “two” in your paper. Underline them, bold them, or italicize them so I
can find them easily. (2 pts)
Writing Restrictions for this assignment:
• Any spelling/punctuation requirement included on a prior assignment will also be
reviewed for accuracy if included in this paper. For example, since “than” and “then”
were included on the first assignment, if you use either in this assignment, they must be
spelled correctly.
• 12-point font
• One and a half spaced
• One page maximum
• Read “On Writing” for the things I will be looking for in your writing
2
ON WRITING
Here are my expectations for all writing assignments:
• Typed in 12-point Times New Roman font
• Double spaced
• Reasonable margins (no smaller than 1 inch)
• In essay format with a proper introduction, body, and conclusion
Since I expect your writing to improve over the semester, I will be more lenient in my
grading of your writing skills at the beginning of the semester. However, these are the
types of grammar issues I expect not to see in any of your writing – penalties will
become harsher as the semester continues (examples are included on page two):
• There should be no run-on or incomplete sentences.
• The paper should be free of misspellings.
• More than one typographical error. Significant typographical errors may result in
a zero for the assignment.
• Inappropriate language and continued misuse of punctuation.
As the semester progresses, you may find that the penalties/comments are harsh.
However, my goal is to train you for the business world, and poor writing, poor spelling,
and typographical errors are not tolerated in business. I would rather you learn how to
address these problems in a classroom setting rather than on your first job with millions
of dollars at risk.
I believe the main reason for poor writing with college students is a lack of attention
rather than a lack of understanding. I believe many of you think you can complete a
written assignment in one sitting, with no editing. THIS IS NOT TRUE! Many of you
will need to write at least two drafts of EVERY assignment in order to make it clear and
concise, using proper grammar with no errors. Some of you will need more than two
drafts. Recognize this and work with it, allowing yourself enough lead time to complete
an assignment and revise it as necessary. Not only do I want you to learn concepts, but I
want you to learn your own writing needs to better prepare you for your future.
EXAMPLES OF POOR WRITING
Run On Sentences
The auditor should have given more consideration to the accounting issues not all
intangible assets should be amortized.
The manager gave the auditor an explanation that was reasonable and the auditor wrote
down the explanation in her workpapers without asking for any additional proof and it
was found later that this explanation could not completely explain the fluctuation in
salaries expense which resulted in the auditors stating there were no material errors when
in fact there were.
Incomplete Sentences/Sentence Fragments
Because the company bought more fixed assets.
While the senior reviewed the new evidence.
Other (poor punctuation, poor language, typographical/spelling errors)
The auditor should asses all material changes.
The auditor’s estimation of the account balance was right on.
The companies financial statements were incorrect.
We reviewed the inventory listing; and determined that it was complete.
We reviewed the inventory listing, it was complete.
There were many things that we could learn form this client.
More examples will be provided as the semester progresses – taken from your papers.
Don’t be an example!
Burlington Bees:
Using Analytical Procedures
as Substantive Tests
Frank A. Buckless, Mark S. Beasley,
Steven M. Glover, and Douglas F. Prawitt
LEARNING OBJECTIVES
After completing and discussing this case you should be able to
Use analytical procedures to develop expectations for revenue accounts
. Recognize factors that lead to precise expectations of account balances
Appreciate the degree of professional judgment involved in evaluating differ-
ences between expected and reported account balances
. Understand the audit planning implications of using analytical procedures as
substantive tests of account balances
BACKGROUND
Burlington Bees, an independent, minor league baseball team, competes in the North-
West Coast League. The team finished in second place in 200X with an 87–57 record. The
Bees’ 200X cumulative season attendance of 434,348 spectators set a new record high for
the team, up from 390,000 in 200W.
Bank-loan covenants require the Bees to submit audited financial statements an-
nually to the bank. The accounting firm of Hickman and Snowden, CPAs, has served as
the Bees’ auditors for the past five years.
One of the major audit areas involves testing ticket revenues. Those revenues
reached nearly $1.9 million in 200W. In prior years, the audit plan called for extensive
detail testing of revenue accounts to gain assurance that reported ticket revenues were
fairly stated.
This case was prepared by Frank A. Buckless, Ph.D. and Mark S. Beasley, Ph.D. of North Carolina State Univer.
sity and Steven M. Glover, Ph.D. and Douglas F. Prawitt, Ph.D. of Brigham Young University, as a basis for class
discussion. It is not intended to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 2000 by Prentice-Hall, Inc. ISBN 0-13-016902-1.
Michelle Kramme, a new audit manager, just received the assignment to be the
manager on the 200X audit. Michelle worked previously on the Bees’ prior-year audits
as a staff auditor. When she learned she would be managing the current-year engage-
ment, she immediately thought back to all the hours of detailed testing of ticket sales
she performed. On some of her other clients, Michelle has been successful at redesign-
ing audit plans to make better use of analytical procedures as substantive tests. She is
beginning to wonder if there is a more efficient way to gather substantive evidence re-
lated to ticket revenues on the Bees’ engagement.
In her first meeting with Bees’ management for the 200X audit, Michelle learned
that the Bees now use an outside company, Tickets R Us, to operate ticket gates for
home games. The terms of the contract require Tickets R Us to collect ticket stubs so that
they can later report total tickets collected per game. Although Tickets R Us does not
break down the total ticket sales into the various price categories, Michelle thinks there
may be a way to develop an analytical procedure using the independently generated to
tal ticket numbers and data from prior audits. To investigate this possibility, Michelle
asked a staff person to gather some information related to reported sales. Here is the in-
formation the staff person gathered from the records of the client, Tickets R Us, and
prior-year working papers:
200X Park Attendance
Total park attendance
434,348
200X Number of Games
Weekday games
43
Weekend games
Information from prior-year audit working papers indicates that average
per-game attendance for weekend games was 25% higher than average per-
game attendance for weekday games.
29
200X Per-Game Ticket Prices
Club seats
$10
Box seats
$ 6
General seats: Adult
$ 4
Child (Senior Citizens) $ 2
Comparison of 200W ticket prices to 200X ticket prices reveals an average in-
crease of 10% between the two years.
Sales Mix
Weekday Weekend
Club seats
30%
25%
Box seats
35%
30%
General seats: Adult
20%
25%
Child (Senior Citizens) 15%
20%
Information from prior-year audit working papers shows that sales mix has
remained fairly constant over the past several years.
200X Promotions: Number of Games
Weekday
Weekend
7
10
Burlington Bees
Information from prior-year audit working papers shows that attendance
generally increases by 10 percent when there is a promotion (e.g., free base-
ball cap, poster, or special entertainment).
REQUIREMENTS
1. Using the information provided, please develop an expectation for ticket rev-
enues for the 200X fiscal year.
2. How close would the Bees’ reported ticket revenue have to be to your expec-
tation for you to consider reported ticket revenue reasonable or fairly stated?
If reported ticket revenues are outside your “reasonableness range,” what
could explain the difference?
3. What are the advantages of using analytical procedures as substantive tests? If
the engagement team decides to use analytical procedures for the Bees’ audit,
how will the audit plan differ from prior years? Do you believe that analytical
procedures should be used as substantive tests for the Bees 200X audit?

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