Bovar Company case study analysis assignment help, top quality case study analysis homework help, 4 pages
Bovar Company case study analysis assignment help: Bovar Company is a large manufacturing company with three divisions in the United States. The first division, B&D Manufacturing Company, is the original company and makes steel subassemblies. Bovarwas incorporated 15 years ago when the second division, Overall Manufacturing Company, was acquired. Overall makes large heat exchangers. The third division, Casper Manufacturing, was acquired by Bovar 2 years ago, and it makes custom industrial machinery. Each of the three divisions has been very profitable in recent years.
Bovar Company is structured as a functional organization. Management believed that the functional organizational structure allowed Bovarto to better control the acquisition and integration of each company into a single company by using the same control systems and by having the same basic management philosophy, common goals, and strategies.
Top management is reconsidering this functional organizational structure, and they are unsure if it is the best structure for moving forward and growing the businesses. There have been some reporting problems, accountability issues, communication difficulties, and crossfunctional coordination limitations in areas such as new product development.
You are on an audit team along with other senior auditors at Bovar Company, and you are preparing for the year-end external audit that is scheduled for February of the upcoming year. Management is concerned about the controls for accounting in each of its companies. They are also concerned about planning for the upcoming audit and the completion of the final audit document.
You and your fellow teammates are assigned to complete the following:
- Evaluate how to organize the business for better managerial control based on accounting information, and make a recommendation to top management.
- Assess the control risk by determining the appropriate tests of controls and substantive tests of transactions relating to the procurement and payment cycle, the capital acquisition and repayment cycle, the sales and cash receipt cycle, and the accounting for inventory.
- Perform an audit based on your assessment of control risk, the procurement and payment cycle, the capital acquisition and repayment cycle, the sales and cash receipt cycle, and the inventory accounting cycle.
- Develop corporate management controls for the accounting functions that can be used in each company.
Each of the following assignments will contain the information that is required to complete the requested tasks. The Income Statement and the Balance Sheet summarize the financial statements for Bovar Company, as follows:
| Bovar Company
Income Statement For the Year Ended December 31 |
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| 2013 | 2012 | 2011 | ||
| Net sales | $141,958,581 | $131,082,160 | $117,994,135 | |
| Cost of goods sold | 97,993,003 | 90,101,738 | 82,003,833 | |
| Gross profit | 43,965,578 | 40,980,422 | 35,990,302 | |
| Operating expenses | 34,949,969 | 31,466,407 | 29,591,371 | |
| Income from operations | 9,015,609 | 9,514,015 | 6,398,931 | |
| Other revenues and gains | 0 | 0 | 0 | |
| Other expenses and losses | 1,650,691 | 1,852,147 | 1,814,104 | |
| Income before income tax | 7,364,918 | 7,661,868 | 4,584,827 | |
| Income tax | 600,025 | 985,978 | 358,294 | |
| Net income for the year | $6,764,893 | $6,675,890 | $4,226,533 | |
| Earnings per share | $6.76 | $6.68 | $4.23 | |
| Bovar Company
Balance Sheet As of December 31 |
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| Assets | 2013 | 2012 | 2011 | |
| Current assets | ||||
| Cash and cash equivalents | $6,714,156 | $6,369,431 | $7,014,387 | |
| Net receivables | 9,601,883 | 7,495,528 | 6,901,225 | |
| Inventory | 28,031,323 | 22,206,259 | 21,975,220 | |
| Other current assets | 149,807 | 124,527 | 114,558 | |
| Total current assets | 44,497,169 | 36,195,745 | 36,005,390 | |
| Property, plant, and equipment | 58,489,606 | 53,596,113 | 50,668,463 | |
| Total assets | $102,986,775 | $89,791,858 | $86,673,853 | |
| Liabilities | ||||
| Current liabilities | ||||
| Accounts payable | $11,277,988 | $8,200,059 | $6,466,412 | |
| Short or current long-term debt | 12,935,495 | 7,868,407 | 8,411,017 | |
| Other current liabilities | 1,712,675 | 1,536,835 | 1,463,088 | |
| Total current liabilities | 25,926,158 | 17,605,301 | 16,340,517 | |
| Long-term debt | 21,234,861 | 19,247,831 | 19,460,800 | |
| Total liabilities | 47,161,019 | 37,033,132 | 35,801,317 | |
| Stockholders’ equity | ||||
| Common stock | 1,000,000 | 1,000,000 | 1,000,000 | |
| Additional paid in capital | 13,667,517 | 13,667,517 | 13,667,517 | |
| Retained earnings | 41,158,239 | 38,091,209 | 36,205,019 | |
| Total stockholders’ equity | 55,825,756 | 52,758,726 | 50,872,536 | |
| Total liabilities and stockholders’ equity | $102,986,775 | $89,791,858 | $86,673,853 | |