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Laramie Wire Manufacturing Essay

636 Words3 Pages

Case 8.1 Laramie Wire Manufacturing The auditor’s first duty at the beginning of the auditing process is to learn the way a company functions. During this process the auditor will gain an understanding of the company’s set-up, and he or she can compare this to other companies within the same industry. Laramie is in business to process products for the marketplace; therefore, the auditor needs to establish is the process in place is working well. The time the company takes to change machine set-up from special order, industrial and residential products averages around six hours. This is under the industry average so there is not an area of concern. The auditor must next look into the sale accounts for Laramie. In 2005 the sales and the cost of goods sold (COGS) for Laramie have risen. The sales went up by 3% while the COGS went up 2%. Because the market prices fell over this period the difference of 1% from sales to COGS, the gain seems to be accurate. …show more content…

There is a concern with the increase of plastic and copper inventory, and this concern is, is there a market for these products. The company may have problems selling such a large stockpile of plastic and copper in their inventory. It is important to check into whether Laramie has an existing order for product or if they anticipate a rise in demand and why they believe this. It is also possible that Laramie expects a future rise in the cost of raw materials and has purchased materials ahead to avoid paying more for their materials. The auditor needs to look into these

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