Crazy Eddie, Inc Essay

1036 Words Jun 7th, 2009 5 Pages
Jun 1,2009
Crazy Eddie, Inc.

Crazy Eddie Inc. was a retail consumer electronics store in New York City. By 1987, Crazy Eddie Inc. had 43 retail outlets, sales exceeding $350million, and outstanding stock with a collective market value of $600 million. Doubling in the four-year period from 1981 to 1984, sales in the consumer electronics industry exploded. Eddie Antar, the owner of the Crazy Eddie, Inc. converted his stores into consumer electronics supermarkets. Antar stocked the shelves of Crazy Eddie's retail outlets with every electronic gadget he could find and with as many different brands of those products as possible. Compute key ratios for period 1984-1987 Inventory turnover 4.58 3.9 3.25 2.5The Inventory turnover rate steadily
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4) Verify consigned agreements and inventory information with the consignees to detect the inclusion of consigned merchandise in year-end inventory. Since the retail consumer electronics industry was undergoing rapid and dramatic changes during the 1980s. About how changes in an audit client's industry should affect audit planning decisions relate to Crazy Eddie Inc., The auditor should use the selected risk assessment techniques in developing the overall audit plan and in planning specific audits. Risk assessment, in combination with other audit techniques, should be considered in making planning decisions such as:
The nature, extent, and timing of audit procedures (in Eddie's case - visiting the stores that had a shortage of inventory)
The areas or business functions to be audited (family related performance in Eddie's case)
The amount of time and resources to be allocated to an audit (the fact that auditors charged only a modest fee says that they couldn't allocate enough resources for the audit)
Main Hurdman charged Crazy Eddie comparatively modest fees for the company's annual audit. A leading critic of major accounting firms alleged that Main Hurdman has "lowalled" to obtain Crazy Eddie as an audit client, realizing that it could make up for any lost audit revenue by selling the company consulting services. Lowballing - the practice whereby auditors

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