Pinnacle manufacturing case

Custom Products About Pinnacle Pinnacle Manufacturing specializes in tanks and containers for the environmental, industrial, and energy markets. Our people, experience, equipment, and facilities allow us to meet the needs of our customers. Pinnacle Manufacturing, a family-owned company, was founded in by veterans of the waste and liquid storage tank equipment industries. Our hydro-test capabilities are bolstered by our specially designed set-up.

Pinnacle Manufacturing Part II a.

STEP 7: VRIO Analysis of Pinnacle Manufacturing:

Identif specific considerations from part I and II of the cas that affect your assessments of engagement risk and acceptable audit risk. External users' reliance on financial statements likelihood of financial difficulties Acceptable Audit Risk and Engagement Risk Issues: The company is privately held, but there is a large amount of debt, therefore the financial statements will be used fairly extensively.

Also, management is considering selling the Machine-Tech division, which has the potential to result in extensive use of the statements by the buyers. Item 4 in the planning phase indicates plans for additional debt financing.

Likelihood of financial difficulties: The solar power engine business revolves around constantly changing technology, thus making it inherently more risky than other businesses, with a better Pinnacle manufacturing case of subsequent bankruptcy.

Item 1 in the planning issues raises a concern about the viability of the Solar-Electro division, but not necessarily the entire company.

The conclusion in Part I of the case was that the likelihood of financial failure is low, even considering the issue with Solar-Electro. Item 7 in the planning phase indicates there is a debt covenant requiring a current ratio above 2.

The current ratio has fallen below 2.

This could result in the loan being called unless a waiver of the loan covenant is granted. No major issue exists that would cause the auditor to question management integrity, but the auditor should have done extensive client acceptance procedures before accepting the client.

It is possible that Item 6 in the planning phase, turnover of internal audit personnel, could be intentional and increases the risk of fraudulent financial reporting. Acceptable audit risk is likely to be medium to low because of the factors listed previously, especially the planned increase in financing and the potential violation of the debt covenant agreement.

Some might prefer an even lower acceptable risk because it is a first year audit. Inherent risks are addressed by examining each of the 11 items in the planning phase.

No effect on inherent risk 2.

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The primary concern is the possibility of obsolete inventory, which affects the valuation of inventory at the lower of cost or market. Inventory, cost of good sold 3. There is a potential related party transaction, which could affect the valuation of the transaction and may require disclosure as a related party transaction.

Manufacturing equipment, footnote disclosures 4.

Pinnacle Manufacturing?part Ii | Case Study Solution | Case Study Analysis

No effect on inherent risk 5. Repairs and maintenance expense and accounts payable.Read this Business Case Study and over 88, other research documents. Pinnacle Manufacturing Part II. a. Identif specific considerations from part I and II of the cas that affect your assessments of engagement risk and /5(1).

INTEGRATED CASE APPLICATION — PINNACLE MANUFACTURING: PART II. (Objectives , ) In Part I of the case, you performed preliminary analytical procedures for Pinnacle (pp.

Pinnacle Manufacturing Part II - Case Study

–). The purpose of Part II is to identify factors influencing risks and the%(1). Although, Pinnacle manufacturing is a privately held company it incurs a large amount of debt.

As a result potential users rely heavily on financial statements. As a result potential users rely heavily on . View Notes - Pinnacle Solution Manual from ACC at University of Hawaii, Manoa. Integrated Case Application PINNACLE MANUFACTURINGPART I a. 95%(). Item 4: Since Pinnacle Manufacturing is a risky client; the auditors have to perform more checking of the documents, account, etc.

Therefore, the audit risk for the project will be low. The auditors would like to be sure that all the accounts are properly checked and verified.

Answer to INTEGRATED CASE APPLICATION — PINNACLE MANUFACTURING: PART II (Objectives , ) In Part I of the case, you pe %(1).