Jeff Carboy owns St. Lawrence Vineyards, a successful winery in the Thousand Islands region. Annual salare $3,500,000 and he has a $1,200,000 loan with a local bank. Salare split between wine sal(88%) and wine tasting and catering (12%). Jeff has excellent personal relationships with his suppliers and has been provided with special contractual terms which allow him delays of up to 120 days to make invoice payments. These arrangements run out this year and he will have 30 days to pay after being invoiced. The bank has made the $1,200,000 loan to St. Lawrence Vineyards based on an understanding that the company will undergo audits of its financial statements. Jeff is an astute entrepreneur and has set up an advisory board which consists of his bank manager, another wine grower in the region, his old high school ethics instructor and track coach, himself, and his accountant. The board has discussed certain issuincluding the following:
• The need for assurance service providers to audit his financial statements so that users can be provided with assurance that his statements are relevant and reliable.
• Non-audit servicthat would provide advice on special projects he may be considering in the future.
• A proper accounting firm to conduct an audit mandate. Required:
a) What is the objective of a financial statement audit and how does it relate to St. Lawrence Vineyards?
b) Jeff Carboy's financial statements must be relevant and reliable. What do these two terms mean in the context of this case?
c) What three characteristics should St. Lawrence Vineyards' auditors possess when conducting an audit? Explain them briefly.
d) What are non-audit services? Can you describe possible non-audit services that St. Lawrence Vineyards might employ?

Question

Jeff Carboy owns St. Lawrence Vineyards, a successful winery in the Thousand Islands region. Annual salare $3,500,000 and he has a $1,200,000 loan with a local bank. Salare split between wine sal(88%) and wine tasting and catering (12%). Jeff has excellent personal relationships with his suppliers and has been provided with special contractual terms which allow him delays of up to 120 days to make invoice payments. These arrangements run out this year and he will have 30 days to pay after being invoiced. The bank has made the $1,200,000 loan to St. Lawrence Vineyards based on an understanding that the company will undergo audits of its financial statements. Jeff is an astute entrepreneur and has set up an advisory board which consists of his bank manager, another wine grower in the region, his old high school ethics instructor and track coach, himself, and his accountant. The board has discussed certain issuincluding the following: 
• The need for assurance service providers to audit his financial statements so that users can be provided with assurance that his statements are relevant and reliable. 
• Non-audit servicthat would provide advice on special projects he may be considering in the future. 
• A proper accounting firm to conduct an audit mandate. Required:
a) What is the objective of a financial statement audit and how does it relate to St. Lawrence Vineyards?
b) Jeff Carboy's financial statements must be relevant and reliable. What do these two terms mean in the context of this case?
c) What three characteristics should St. Lawrence Vineyards' auditors possess when conducting an audit? Explain them briefly.
d) What are non-audit services? Can you describe possible non-audit services that St. Lawrence Vineyards might employ?

Quizplus · Accepted Answer

The Answer of Jeff Carboy owns St. Lawrence Vineyards, a successful winery in the Thousand Islands region. Annual salare $3,500,000 and he has a $1,200,000 loan with a local bank. Salare split between wine sal(88%) and wine tasting and catering (12%). Jeff has excellent personal relationships with his suppliers and has been provided with special contractual terms which allow him delays of up to 120 days to make invoice payments. These arrangements run out this year and he will have 30 days to pay after being invoiced. The bank has made the $1,200,000 loan to St. Lawrence Vineyards based on an understanding that the company will undergo audits of its financial statements. Jeff is an astute entrepreneur and has set up an advisory board which consists of his bank manager, another wine grower in the region, his old high school ethics instructor and track coach, himself, and his accountant. The board has discussed certain issuincluding the following: 
• The need for assurance service providers to audit his financial statements so that users can be provided with assurance that his statements are relevant and reliable. 
• Non-audit servicthat would provide advice on special projects he may be considering in the future. 
• A proper accounting firm to conduct an audit mandate. Required:
a) What is the objective of a financial statement audit and how does it relate to St. Lawrence Vineyards?
b) Jeff Carboy's financial statements must be relevant and reliable. What do these two terms mean in the context of this case?
c) What three characteristics should St. Lawrence Vineyards' auditors possess when conducting an audit? Explain them briefly.
d) What are non-audit services? Can you describe possible non-audit services that St. Lawrence Vineyards might employ?

Jeff Carboy Owns St