Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

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Chapter 8, Problem 14RQ

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Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 8, Problem 14RQ

To determine

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

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Answer 3

Question

Chapter 8, Problem 14RQ

To determine

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

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Answer 4

Question

Chapter 8, Problem 14RQ

To determine

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

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Answer 5

Chapter 8, Problem 14RQ

To determine

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

Answer 6

Chapter 8, Problem 14RQ

To determine

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

Answer 7

Chapter 8, Problem 14RQ

To determine

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 8 - Prob. 1RQ Ch. 8 - Prob. 2RQ Ch. 8 - Prob. 3RQ Ch. 8 - Prob. 4RQ Ch. 8 - Prob. 5RQ Ch. 8 - Prob. 6RQ Ch. 8 - Prob. 7RQ Ch. 8 - Prob. 8RQ Ch. 8 - Prob. 9RQ Ch. 8 - Prob. 10RQ

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

Solution Summary: The author explains the purpose of a client's performance measurement system and the way in which it must be useful to the auditor.

Indicate the purpose of the client’s performance measurement system and explain the way in which this system must be useful to the auditor. Provide examples of key performance indicators for the given businesses.

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