Shooting for Assurance: The Case of Blazing Arrow Speed Harvard Case Solution & Analysis

Shooting for Assurance: The Case of Blazing Arrow Speed Case Solution

The CEO of Blitz Bow Corporation (BBC), Samuel Blitz has approached the firm to provide assurance services for its statement regarding the bow speed. As per the client, the assurance will add the value to its product if it's financial performance information will be attested and verified so that customer may feel satisfied that they are buying the right product and are not being misled. As an auditor, we usually engaged in providing the audit engagements that involves auditing of financial information and state the opinion, by giving reasonable assurance, that the financial statements are free from material misstatements. This type of engagement is quiet unusual but within the scope of our profession.

By analyzing the overall archery goods industry and business of the company, it is evident that the engagement will require sufficient expertise and understanding of the archery equipment and related performance information. As per the auditing and attestation standards there are few engagement types[1] that might fit well to this assurance which are:

  • Attest Engagement, in this engagement the certified public accountant gives an opinion in the form of report or issue an examination, a review or agreed upon procedures report regarding the subject matter or assertion about the subject matter. That subject matter is the responsibility of the other party.
  • Agreed upon Procedures Engagement, in this engagement the auditor gives opinion on the agreed upon procedures, specifically agreed upon by the auditor and the client to perform auditing on a specific procedure or subject matter.
  • Compliance attestation, this engagement is related to the company's compliance for each of the following requirement such as specified laws and regulations, rules, contracts; it also involves assessing the internal control's compliance with the certain requirements and standards.

As per the study of these standards the best fit for this engagement is the Attest engagement governed by AT section 101 standards. The underlying engagement is covered in the subject matter definition of the attest engagement that is Historical or prospective performance or condition including performance measurement.

The firm has to provide assurance that the company bows is best in the market with arrow speed of 360 feet per second. There were two methods of bow speed testing that is ATA and IBO. ATA has more stringent standards for testing the speed than the IBO. The company BBC uses the ATA Guidelines while the industry focus is on using the IBO guidelines.

The engagement will require the expertise of the industry and the mechanism and usage information of the archery. The firm has the required expertise since the few auditors of the company including you are associated with the archery club and use to enjoy this sport.  Thus the firm will have the technical knowledge as well as the other archery information to effectively execute this engagement. The final decision lies with you, although there are certain matters that need to be considered first.

Deficiencies in the report

Brady has assigned the second year audit staff, Mike for doing the testing in place of john and Sarah. Brady was a second year student. Firstly he was not competent and might not be familiar with the audit practice and all the required standards. Secondly he was not technically proficient like john and Sarah therefore was not in a position to perform the test critically and objectively.The practitioner must also have adequate knowledge of the subject matter (PCAOB AT 101.21). Both the standards were not met. Mike should have been at least accompanied by either john or Sarah so that the testing had been performed properly................

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