Monday, February 25, 2019
Bridgford Foods Essay
Bridgford Foods is known as a sm every(prenominal), publicly traded bon ton of the food industry. Clients of Bridgford Foods have a relatively high inherent take a chance. The exertion of the said industry is subject to various dangers, such as inauspicious changes in the general economic conditions, the evolution of consumer preferences, nutritional and health-related concerns, the inspections done, including the processing simplicitys multiform in the federal, state, and local products. The liability claims of consumer products and the hazards associated with product tampering were also interpreted into c atomic number 18ful consideration.Furthermore, several recalls made were associated with the recent outbreaks of illnesses among the meat and poultry products. such greatly affected the operating results and the financial position of the friendship. In access to this, industry characteristics were related to the factors that affected the opinion of frameworks of Bridg ford Foods Corporation. Since the industry was very competitive, hurt cutting would have its related effects on the revenue. Unfortunately, Bridgford Foods was non portion of the leading industries in the country.In terms of performance, the products of the said company were not as competitive as those of the leaders in the industry. In plus to this, the company is not as profitable and as financially shelter as those of the major companies in the industry. For the year 2007, Bridgford Food had a simplification in its total sales, as compared to the other years. In a traverse issued, the company stated that, sales for the first quarter ended in January 25, 2008, and was an estimated $1,319,000. Prior to the first twelve weeks of the fiscal year, there was a ebb in the total, which was 3.1%.The industry factors result in an increased assessment of the risk material misstatement of BridgFord Foods Corporation. This led to a lower determination of perception risk and more subs tantive tests. Estimations and assumptions were particularly important in the assessment of risks for material misstatement of Johnson, Inc. The management made certain estimations and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent upon(p) assets and liabilities at the date of the financial statements.In addition to this, reported revenues and expenses during the various(prenominal) reporting periods were also given much considerations. The amounts estimated related to liabilities for workers compensation, employee healthcare and gift benefits are especially subjected. The inherent risk relating to the accuracy of an account sleep that involves a high degree of management judgment, or that is difficult to compute, is evaluated as high. More everyplace, the credit risk of the company was diversified across a huge range clients and geographic regions.Losses incurred imputable to credit risks have latterly been immaterial, wi th the client maintaining the cash symmetrys at financial institutions. At times, these clients exceed the amounts insured by the Federal Deposit Insurance Corporation of $100 zillion per institution. However, the clients have significant amounts receivable amounts with few of the well known clients, although historically secure, could also be subject to material risk when the operations of these clients pose to deteriorate.Regardless(prenominal) of such dilemma, the members of the Bridgford family can still exercise significant control over the company. This is due to the fact that the family owns approximately 77% in stocks of the company, fashioning them own more than trio fourths of the whole company. On top of this, three members of the Bridgford family were members of the Board of Directors. This gives the members of the Bridgford family the ability to exert substantial influence and power over the management and affairs of the company.This include matters requiring the action of shareholders. the amendment to by-laws, the election and removal of directors, coalition proposals, consolidation or sale of all or substantially all of the assets and other corporate transactions. The Bridgford family members who own majority of the stocks dominate in the conclusiveness making of the company. This factor led to a high risk assessment of material misstatement fore there were no reviews regarding important decisions and actions taken.However, these should be taken in the best interest of the company and its stockholders. The inherent limitations included the realities of im veracious judgments and decision makings, including the breakdowns that can occur due to simple errors and mistakes. Additionally, controls can be circumvented by the individual acts of some people, by collusion of two or more people, or by management override of the control. All the supra factors increased inherent risk for a particular account balance assertion, making the militar y rating relatively high.In the audit planning stage, where the evaluation of inherent risk for an account balance assertion is high, auditors regard this as a significant risk requiring special audit attention. The control risk of Bridgford foods is low. The client maintains and evaluates a system of inner accounting controls, and a broadcast of inner(a) auditing designed to provide reasonable assurance. In so doing, the companys assets are protected and transactions were performed in accordance with the proper authorization, and were recorded accordingly.This system of internal accounting control is continually reviewed and modify in response to evolving business conditions and operations and to recommendations made by the freelance registered public accounting firm and internal auditor. The client also has an open a code of conduct. Furthermore, the audit committee is composed of independent directors who are not officers or employees of the client, and do not have other rela tionships that spoil independence. The audit committees also employ two financial experts.They are sound in overseeing the quality of controls and the management of fraud. From those mentioned, I believe that the accounting and internal control systems provide reasonable assurance that assets are safeguarded and financial selective information is reliable, with the overall control risk low. In general, the design and implementation of internal control are considered effective. The increase in the risk of material misstatement due to these factors will result in a lower determination of detection risk and an increase in the scope of the auditors work.Pre-audit elaboration risk is significantly and positively associated with the estimated level of discretionary accruals reported in audited financial statements. As high levels of discretionary accruals have been shown to be associated with higher risk of post-audit litigation, it appears that rather than taking actions that result in higher-risk clients reporting less aggressive discretionary accruals, auditors instead are accepting a higher post-audit risk for these clients.