(((((((PLEASE TAKE A LOOK AT THE ATTACHMENT IN ORDER TO SEE THE FULL QUESTION)))))))))Petersen Seafood, Inc.Petersen Seafood, Inc. buys and processes crab, which it sells mainly to Japan and 2 distributors in Montréal and Toronto. The business also sells crab to local consumers and restaurateurs from a sales counter at the plant. During the fishing season, which lasts approximately 15 weeks, the business produces 24,000 kg of crab per day, 5 days a week. Crab is processed before being frozen and packed in 15-kg boxes. Crab for the Japanese market is transported in refrigerated containers over more than 1,100 km to the Mirabel Airport, where it is shipped to its final destination by cargo airplane.JPL Transpo, a local company that Petersen has been dealing with for several years, transports the containers. Containers hold 1,500 boxes and the negotiated rates are $0.20/kg for shipments to the Montréal region and$0.25/kg for the Toronto region.During the last few monthly audits, the owners have noted significant discrepancies between the total number of boxes produced and the number of boxes sold. The final physical inventory count at the end of the fishing season showed a discrepancy of 406 boxes between boxes produced and boxes sold. Normally, this discrepancy is less than 0.1% of the total yearly production. This year, the owners have also noted on several occasions that surplus production was not enough to satisfy local demand. This phenomenon had rarely occurred in the past. Because of these events, the owners have asked you, a management auditing expert, to analyze the situation based on the following data.Here are the data obtained prior to the analysis:1. Delivery to foreign markets averages 7,500 boxes of crab per week, which represents 5 refrigerated containers.2. Containers are sealed before they leave the plant, by truck, to the Mirabel Airport and the 2 distribution centres in Montréal and Toronto. The shipping clerk seals the containers and signs the transport company’s bill of lading.3. For shipments to Japan, the crab boxes are transferred at the airport to smaller air transport containers.Petersen is responsible for all ground shipping costs. Air freight costs are paid by the Japanese customer. You have asked your assistant to carry out a preliminary analysis of the production and invoicing files as well as transportation costs. The results of the analysis carried out with computer-assisted auditing techniques (CAATs) are presented in Exhibit 1. The other files in the central system are the shipping file and the employee file.Production fileLOTNO: Lot number: unique transaction number generated automatically by the system PRODDATE: Date of lot productionQTYPRO: Crab quantity processed (in kg) LABHRS: Labour hours used in processing PROD: Production (number of 15-kg boxes)EMPNO: Employee number of the person who completed the transactionInvoicing fileINVNO: Invoice number: unique transaction number generated automatically by the systemINVDATE: Invoice date CUSTNO: Customer number 1: Japan Crab Meat Market2: Montréal Fish & Sea Food Market 3: Toronto Fish & Sea Food Market 4: Local sales counterQTYINV: Number of boxes sold and invoiceEMPNO: Employee number of the person who completed the transactionTransportation costs fileREFNO: Reference number: unique transaction number generated automatically by the system SHIPNO: Shipping number: unique transaction number generated automatically by the system CUSTNO: Customer numberCARNO: Carrier number CARINVNO: Carrier invoice numberINVAMT: Invoice amount for transportation costs PAYDATE: Date of payment of invoiceEMPNO: Employee number of the person who received and paid the invoiceShipping fileSHIPNO: Shipping number: unique transaction number generated automatically by the system SHIPDATE: Shipping dateCARNAME: Carrier name CUSTNO: Customer number 1: Japan Crab Meat Market2: Montréal Fish & Sea Food Market 3: Toronto Fish & Sea Food MarketSHIPQTY: Quantity shipped (number of 15-kg boxes)EMPNO: Employee number of the person who signed the bill of ladingEmployee fileEMPNO: Employee’s number EMPNAME: Employee’s last name EMPFTNAME: Employee’s first name SIN: Employee’s social insurance number DOB: Employee’s date of birthADDRESS1: Employee’s street number and name ADDRESS2: Employee’s cityTD1: TD1 amountDATEHIRE: Date employee was hired
Petersen Seafood, Inc.
Petersen Seafood, Inc. Petersen Seafood, Inc. buys and processes crab, which it sells mainly to Japan and 2 distributors in Montréal and Toronto. The business also sells crab to local consumers and restaurateurs from a sales counter at the plant. During the fishing season, which lasts approximately 15 weeks, the business produces 24,000 kg of crab per day, 5 days a week. Crab is processed before being frozen and packed in 15-kg boxes. Crab for the Japanese market is transported in refrigerated containers over more than 1,100 km to the Mirabel Airport, where it is shipped to its final destination by cargo airplane. JPL Transpo, a local company that Petersen has been dealing with for several years, transports the containers. Containers hold 1,500 boxes and the negotiated rates are $0.20/kg for shipments to the Montréal region and $0.25/kg for the Toronto region. During the last few monthly audits, the owners have noted significant discrepancies between the total number of boxes produced and the number of boxes sold. The final physical inventory count at the end of the fishing season showed a discrepancy of 406 boxes between boxes produced and boxes sold. Normally, this discrepancy is less than 0.1% of the total yearly production. This year, the owners have also noted on several occasions that surplus production was not enough to satisfy local demand. This phenomenon had rarely occurred in the past. Because of these events, the owners have asked you, a management auditing expert, to analyze the situation based on the following data. Here are the data obtained prior to the analysis: Delivery to foreign markets averages 7,500 boxes of crab per week, which represents 5 refrigerated containers. Containers are sealed before they leave the plant, by truck, to the Mirabel Airport and the 2 distribution centres in Montréal and Toronto. The shipping clerk seals the containers and signs the transport company’s bill of lading. For shipments to Japan, the crab boxes are transferred at the airport to smaller air transport containers. Petersen is responsible for all ground shipping costs. Air freight costs are paid by the Japanese customer. You have asked your assistant to carry out a preliminary analysis of the production and invoicing files as well as transportation costs. The results of the analysis carried out with computer-assisted auditing techniques (CAATs) are presented in Exhibit 1. The other files in the central system are the shipping file and the employee file. Production file LOTNO: Lot number: unique transaction number generated automatically by the system PRODDATE: Date of lot production QTYPRO: Crab quantity processed (in kg) LABHRS: Labour hours used in processing PROD: Production (number of 15-kg boxes) EMPNO: Employee number of the person who completed the transaction Invoicing file INVNO: Invoice number: unique transaction number generated automatically by the system INVDATE: Invoice date CUSTNO: Customer number 1: Japan Crab Meat Market 2: Montréal Fish & Sea Food Market 3: Toronto Fish & Sea Food Market 4: Local sales counter QTYINV: Number of boxes sold and invoice EMPNO: Employee number of the person who completed the transaction Transportation costs file REFNO: Reference number: unique transaction number generated automatically by the system SHIPNO: Shipping number: unique transaction number generated automatically by the system CUSTNO: Customer number CARNO: Carrier number CARINVNO: Carrier invoice number INVAMT: Invoice amount for transportation costs PAYDATE: Date of payment of invoice EMPNO: Employee number of the person who received and paid the invoice Shipping file SHIPNO: Shipping number: unique transaction number generated automatically by the system SHIPDATE: Shipping date CARNAME: Carrier name CUSTNO: Customer number 1: Japan Crab Meat Market 2: Montréal Fish & Sea Food Market 3: Toronto Fish & Sea Food Market SHIPQTY: Quantity shipped (number of 15-kg boxes) EMPNO: Employee number of the person who signed the bill of lading Employee file EMPNO: Employee’s number EMPNAME: Employee’s last name EMPFTNAME: Employee’s first name SIN: Employee’s social insurance number DOB: Employee’s date of birth ADDRESS1: Employee’s street number and name ADDRESS2: Employee’s city TD1: TD1 amount DATEHIRE: Date employee was hired EXHIBIT 1 Command: TOTAL FIELDS PROD The TOTAL command computes total production expressed in 15-kg boxes (PROD) from the production table. Table: Production PROD 123,500 Command: CLASSIFY ON CUSTNO SUBTOTAL QTYINV TO SCREEN The CLASSIFY command computes the number of invoices, from the invoicing table, that were issued for each customer (CUSTNO). The amount for each customer appears in the Count field. The command also generates the total value of boxes (QTYINV) invoiced for each customer. Table: Invoicing CUSTNO Count Percent of Count Percent of Field QTYINV 89 72.36% 81.84% 100,740 10 8.13% 9.02% 11,101 7.32% 8.21% 10,108 15 12.19% 0.93% 1,145 Totals 123 100% 100% 123,094 Command: CLASSIFY ON CUSTNO SUBTOTAL AMOUNTPD TO SCREEN The CLASSIFY command computes the amount of transportation invoices, from the transportation costs table, that were paid by each customer (CUSTNO). The amount for each customer appears in the Count field. The command also generates the total value of invoices paid (AMOUNTPD) by each customer. Table: Transportation costs CUSTNO Count Percent of Count Percent of Field AMOUNTPD 89 82.41% 80.74% 302,220 10 9.26% 9.14% 34,203 8.33% 10.12% 37,905 Totals 108 100% 100% 374,328 Required What preliminary conclusions can you draw from the results shown in Exhibit 1? (6 marks) In non-technical language, explain the additional analyses that you would recommend your assistant to perform using the information contained in the files, in order to obtain other indicators to help you plan your audit. (4 marks) Based on the data given in the case, what additional controls or procedures would you recommend that Petersen implement to improve its operations? (4 marks)
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