You have just completed an interview with the newly formed audit committee of the Andrews Street Youth Centre (ASYC). This organization was created to keep neighborhood youth off the streets by providing recreational facilities where they can meet, exercise, play indoor sports, and hold dances. Since its inception, the organization has managed to survive on the basis of user fees charged to parents whose children use the program. This year the center received support from a new provincial government program, in the form of an operating grant along with subsidy fees for those parents whose income is considered insufficient to pay the user fee. A local foundation, with a long history in the community and a reputation for honoring its commitments, has also come to the aid of the center. This outside financial support came with the provision that the center now present audited financial statements annually.
Your firm is attempting to obtain the audit, as it is a November year-end, and the audit would be completed at a traditionally slow time of year. Many questions were posed during the interview, and the ASYC audit committee has requested a written response to the issues raised. Excerpts from the interview follow:
1. |
Jane Barnes provided valuable advice on improved management efficiency. She is a professional consultant and although these consulting fees were not budgeted for, the centre made several changes that resulted in a reduction of administrative costs. Ms. Barnes estimates that her full-rate fee would have been $7,500. |
2. |
Rick James, who is a qualified Phys. Ed. instructor, has been substituting one day a week at no charge, which reduced our budgeted expenditures by $4,500 this year. |
3. |
Parents have donated an awful lot of their time to operate fundraising activities (in addition to those involved with the Computer Fund). This time must be worth thousands of dollars.” |
Required
Prepare a draft of the response that will be sent to the audit committee.using Canadian accounting and auditing standards
This year his company gave us a variety of items, such as exercise and bodybuilding apparatus and some basketball equipment. This is pretty neat stuff and must be worth at least $12,000 to $15,000. The audit committee does not want to record this because they are concerned that if it ends up in revenue our operating grants might be reduced, this is wrong as per the accounting standards. Audit committee should show in there books.
Certain of the parents have donated goods or their time and would like to receive a tax receipt for the value of these donations. We are not certain whether we will have to reflect these in our financial statements this year, this is not true as per the relevant accounting standards.they should issue tax receipt Nd also show in books.
You have just completed an interview with the newly formed audit committee of the Andrews Street...
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