Financial Stmts
What was the critical error in accounting for the purchase of the Alaska Assets?
The Valuation of the Acquired Oil and Gas Reserves Was Based Upon a Reserve Report, Which Did Not Represent Fair Value
Scott Boruff was announced as CEO in 2008. He has no experience with oil or gas production but was the son-in-law of the founder of Miller Energy Resources, Inc. Why would this be concerning during an audit?
This is concerning because he was hired due to his familial ties. He had previous experience with investment banking and deal making but had no business being the CEO of this corporation. Miller Energy had plans to continue acquiring other companies so that lines up more with Boruff’s expertise
What celebrity slapped Chris Rock in the face at the Oscar awards?
Will Smith
Carlton Vogt, the partner in charge of auditing Miller Energy, spent minimal time on-site while fieldwork for Miller’s audit was conducted. He also knew that the staff auditors did not have enough knowledge in the oil and gas industry. His lack of supervision over this audit is what kind of audit failure?
Failure to Plan and Supervise (AU 311)
Many people call it a fruit, but it is technically a large herb.
A banana
What should have been the correct journal entry for the Miller Energy acquisition of Alaska Energy Assets?
Debit Assets at their fair market value, and credit cash paid and liabilities incurred.
The purchase of Alaska Assets boosted the net income of Miller Energy to $272 million dollars with the bargain purchase. Previously, Miller was reporting net losses and their stock prices historically traded below $1. They planned to go public again in 2011. Would this have any impact on management wanting to manipulate their financial statements?
If they were planning to go public, they would need to have a profit. People want to invest in strong companies, not a business that has a net operating loss every quarter.
What white collar crime did Martha Stewart go to jail for in 2001?
Insider trading
Carlton over relied on a reserve report and an asset replacement cost study without taking extra steps to test the audit evidence. He did not have sufficient evidence for the fair value of Alaska acquisition. What kind of audit failure is this?
Failure to Obtain Sufficient Competent Evidential Matter (AU 326)
This popular fruit is 98 percent water.
A watermelon
What accounting principle was violated by Miller Energy when they valued Alaska Energy Assets at $480 million?
They failed to record the Alaska Acquisition at fair value at the time of purchase
Describe an issue with Scott Boruff hiring Darren Gibson
Gibson was previously employed by Provident Asset Management who was in kahoots with GunnAllen Finance for a Ponzi scheme. Boruff was employed by GunnAllen Finance but was never charged.
What celebrity interrupted Taylor Swift’s VMA acceptance speech?
Kanye West
Carlton hired a specialist regarding the valuation of Miller Energy’s Alaska acquisition. He did not properly consider the engineer’s experience in fair valuation of assets, which was nonexistent. Carlton also did not obtain an understanding of testing methods and assumptions used by the specialist, the engineer, or test data provided to the specialist. What kind of audit failure is this?
Failure in Using the Work of a Specialist (AU 336)
A hand-held fruit with a well known homonym.
A pear