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Question: Southeast Shoe Distributor (SSD) is a closely

Southeast Shoe Distributor (SSD) is a closely owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men’s, women’s, and children’s shoes to retail shoe stores located in small- to mid-size communities. The company’s basic strategy is to obtain a broad selection of designer-label and name brand merchandise at low prices and resell the merchandise to small one-location retail stores that have difficulty obtaining reasonable quantities of designer and name brand merchandise. The company is able to keep the cost of merchandise low by (1) selectively purchasing large blocks of production over-runs, over-orders, mid- and late-season deliveries and last season’s stock from manufacturers and other retailers at significant discounts, (2) sourcing in-season name-brand and branded designer merchandise directly from factories in Brazil, Italy, and Spain, and (3) negotiating favorable prices with manufacturers by ordering merchandise during off-peak production periods and taking delivery at one central warehouse. During the year, the company purchased merchandise from over 50 domestic and international vendors, independent resellers, manufacturers and other retailers that frequently had excess inventory. Designer and name brand footwear sold by the company during the year include the following: Amalfi, Clarks, Dexter, Fila, Florsheim, Naturalizer, and Rockport. At the current time, SSD has one warehouse located in Atlanta, Georgia. Last year, SSD had 123 retail shoe store customers and had net sales of $7,311,214. Sales are strongest in the second and fourth calendar-year quarters with the first calendar-year quarter substantially weaker than the rest. BACKGROUND SSD is required to have an audit of its annual financial statements to fulfill requirements of loan agreements with financial institutions. This audit is to be completed in accordance with the AICPA professional standards for the audit of nonpublic companies. Your audit firm is currently planning for the Fiscal 2018 audit in accordance with these professional standards. SSD has the following general ledger accounts related to sales and cash collection activities:  Sales  Sales Discounts  Sales Returns and Allowances  Uncollectible Accounts Expense  Accounts Receivable  Allowance for Uncollectible Accounts In accordance with the professional standards, Susan Mansfield, audit manager, reviewed SSD’s control environment, risk assessment process, and monitoring system and has assessed them as strong. Additionally, Susan determined that performance materiality should be $40,000 for the revenue cycle and that acceptable audit risk should be low. Bill Zander, staff auditor, assessed inherent risk related to sales, cash receipts, and accounts receivable and prepared the enclosed audit risk matrix (referenced in the top right hand corner as R 50 and R 50-1). As the audit senior, you have been assigned responsibility for selecting audit procedures to perform for the revenue cycle that will achieve the desired acceptable audit risk at the lowest possible cost. REQUIRED [1] Complete step 3 of the audit program R 1-3 by selecting specific audit tests from your work in the previous two SSD audit case assignments (see R 40-1, R 40-2, R 40-3, R 41-1, R 41-2, and R 41-3). Document your work in audit schedules R 1-3, R 40-1, R 40-2, R 40-3, R 41-1, R 41-2, and R 41-3. [2] Assess planned control risk and risk of material misstatement by completing step 4 of the audit program R 1-3. Document completion of your work in audit program R 1-3. Record your assessment in audit schedule R-50. Document in audit schedules R 50-2 and R 50-3 the specific tests by number that you have chosen, the assertion(s) covered by each test, and the level of assurance (high, medium, or low) provided.
Southeast Shoe Distributor (SSD) is a closely owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men’s, women’s, and children’s shoes to retail shoe stores located in small- to mid-size communities. The company’s basic strategy is to obtain a broad selection of designer-label and name brand merchandise at low prices and resell the merchandise to small one-location retail stores that have difficulty obtaining reasonable quantities of designer and name brand merchandise. The company is able to keep the cost of merchandise low by (1) selectively purchasing large blocks of production over-runs, over-orders, mid- and late-season deliveries and last season’s stock from manufacturers and other retailers at significant discounts, (2) sourcing in-season name-brand and branded designer merchandise directly from factories in Brazil, Italy, and Spain, and (3) negotiating favorable prices with manufacturers by ordering merchandise during off-peak production periods and taking delivery at one central warehouse.
During the year, the company purchased merchandise from over 50 domestic and international vendors, independent resellers, manufacturers and other retailers that frequently had excess inventory. Designer and name brand footwear sold by the company during the year include the following: Amalfi, Clarks, Dexter, Fila, Florsheim, Naturalizer, and Rockport. At the current time, SSD has one warehouse located in Atlanta, Georgia. Last year, SSD had 123 retail shoe store customers and had net sales of $7,311,214. Sales are strongest in the second and fourth calendar-year quarters with the first calendar-year quarter substantially weaker than the rest.
BACKGROUND
SSD is required to have an audit of its annual financial statements to fulfill requirements of loan agreements with financial institutions. This audit is to be completed in accordance with the AICPA professional standards for the audit of nonpublic companies. Your audit firm is currently planning for the Fiscal 2018 audit in accordance with these professional standards. SSD has the following general ledger accounts related to sales and cash collection activities:
 Sales
 Sales Discounts
 Sales Returns and Allowances
 Uncollectible Accounts Expense
 Accounts Receivable
 Allowance for Uncollectible Accounts
In accordance with the professional standards, Susan Mansfield, audit manager, reviewed SSD’s control environment, risk assessment process, and monitoring system and has assessed them as strong. Additionally, Susan determined that performance materiality should be $40,000 for the revenue cycle and that acceptable audit risk should be low. Bill Zander, staff auditor, assessed inherent risk related to sales, cash receipts, and accounts receivable and prepared the enclosed audit risk matrix (referenced in the top right hand corner as R 50 and R 50-1). As the audit senior, you have been assigned responsibility for selecting audit procedures to perform for the revenue cycle that will achieve the desired acceptable audit risk at the lowest possible cost.
REQUIRED 
[1] Complete step 3 of the audit program R 1-3 by selecting specific audit tests from your work in the previous two SSD audit case assignments (see R 40-1, R 40-2, R 40-3, R 41-1, R 41-2, and R 41-3). Document your work in audit schedules R 1-3, R 40-1, R 40-2, R 40-3, R 41-1, R 41-2, and R 41-3.
[2] Assess planned control risk and risk of material misstatement by completing step 4 of the audit program R 1-3. Document completion of your work in audit program R 1-3. Record your assessment in audit schedule R-50. Document in audit schedules R 50-2 and R 50-3 the specific tests by number that you have chosen, the assertion(s) covered by each test, and the level of assurance (high, medium, or low) provided.


Southeast Shoe Distributor (SSD) is a closely owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men’s, women’s, and children’s shoes to retail shoe stores located in small- to mid-size communities. The company’s basic strategy is to obtain a broad selection of designer-label and name brand merchandise at low prices and resell the merchandise to small one-location retail stores that have difficulty obtaining reasonable quantities of designer and name brand merchandise. The company is able to keep the cost of merchandise low by (1) selectively purchasing large blocks of production over-runs, over-orders, mid- and late-season deliveries and last season’s stock from manufacturers and other retailers at significant discounts, (2) sourcing in-season name-brand and branded designer merchandise directly from factories in Brazil, Italy, and Spain, and (3) negotiating favorable prices with manufacturers by ordering merchandise during off-peak production periods and taking delivery at one central warehouse.
During the year, the company purchased merchandise from over 50 domestic and international vendors, independent resellers, manufacturers and other retailers that frequently had excess inventory. Designer and name brand footwear sold by the company during the year include the following: Amalfi, Clarks, Dexter, Fila, Florsheim, Naturalizer, and Rockport. At the current time, SSD has one warehouse located in Atlanta, Georgia. Last year, SSD had 123 retail shoe store customers and had net sales of $7,311,214. Sales are strongest in the second and fourth calendar-year quarters with the first calendar-year quarter substantially weaker than the rest.
BACKGROUND
SSD is required to have an audit of its annual financial statements to fulfill requirements of loan agreements with financial institutions. This audit is to be completed in accordance with the AICPA professional standards for the audit of nonpublic companies. Your audit firm is currently planning for the Fiscal 2018 audit in accordance with these professional standards. SSD has the following general ledger accounts related to sales and cash collection activities:
 Sales
 Sales Discounts
 Sales Returns and Allowances
 Uncollectible Accounts Expense
 Accounts Receivable
 Allowance for Uncollectible Accounts
In accordance with the professional standards, Susan Mansfield, audit manager, reviewed SSD’s control environment, risk assessment process, and monitoring system and has assessed them as strong. Additionally, Susan determined that performance materiality should be $40,000 for the revenue cycle and that acceptable audit risk should be low. Bill Zander, staff auditor, assessed inherent risk related to sales, cash receipts, and accounts receivable and prepared the enclosed audit risk matrix (referenced in the top right hand corner as R 50 and R 50-1). As the audit senior, you have been assigned responsibility for selecting audit procedures to perform for the revenue cycle that will achieve the desired acceptable audit risk at the lowest possible cost.
REQUIRED 
[1] Complete step 3 of the audit program R 1-3 by selecting specific audit tests from your work in the previous two SSD audit case assignments (see R 40-1, R 40-2, R 40-3, R 41-1, R 41-2, and R 41-3). Document your work in audit schedules R 1-3, R 40-1, R 40-2, R 40-3, R 41-1, R 41-2, and R 41-3.
[2] Assess planned control risk and risk of material misstatement by completing step 4 of the audit program R 1-3. Document completion of your work in audit program R 1-3. Record your assessment in audit schedule R-50. Document in audit schedules R 50-2 and R 50-3 the specific tests by number that you have chosen, the assertion(s) covered by each test, and the level of assurance (high, medium, or low) provided.


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> Southeast Shoe Distributor (SSD) is a closely-owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and resells men’s, women’s, and childrenâ€&#

> Southeast Shoe Distributor (SSD) is a closely owned business founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and resells men’s, women’s, and children’s sho

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> Southeast Shoe Distributor (SSD) is a closely owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men’s, women’s, and childrenâ€&#15

> Southeast Shoe Distributor (SSD) is a closely owned business that was founded ten years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men’s, women’s, and childrenâ€&#1

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