Your firm is auditing CCure (CC). CC has been working on developing a new drug called “NewYou” which began as a cure
for COVID. It has been entirely developed in-house with billions of dollars spent on internal research. No money spent so far
is for actual manufacturing or securing intellectual property rights and the drug has not reached a state of approval that meets
the definition for capitalization under GAAP. CC is very encouraged by recent testing as being completely safe and completely
effective. CC is all-in on the NewYou drug and they have no other drugs or other sources of revenue.
Currently, Ruther Mooch Tanwork is suing CC for $1.5 billion alleging NewYou infringes upon certain intellectual property
rights held by Ruther. CC asserts that the plaintiff’s case against them has no merit. However, rather than letting defense of
the lawsuit distract them from research, CC offered and settled the lawsuit for $1.5 million after the balance sheet date but
before your audit is complete.
CC’s investors are becoming very nervous about the massive investment but has been assured by management that the current
year sales will provide at least $100 million of net income. However, as mentioned above, the FDA has not yet approved the
drug, not even after the end of the year. Also, the debt they have outstanding has no debt reduction requirements until it
becomes due December 31, 2025. It does require interest-only payments at a rate of 7%. Management states that there were no
new borrowings during the year.
CC mentioned that they have acquired, this year, a significant amount of equipment to be used in the manufacture of NewYou.
The staff will migrate from research activities into development, and accordingly there have been no significant changes to the
number of employees nor their pay.
Based on the following trial balance (debits positive, credits in brackets), please perform planning analytics and note the items
which peak your attention (audit risk) as an auditor- including anything that you do not see here which you expect. In your
answer, please indicate a possible reason for the unexpected fluctuation, or if you know it is an error, state so. Also, please list
accounts and activity as appropriate to support your analysis. Finally, in accordance with SAS 99, present any fraud risk
factors identified.
Current Prior Dollar %
Year Year Change Change
Cash 75,000 23,370,002 (23,295,002) -100%
Inventory 250,000 – 250,000 #DIV/0!
Prepaid insurance 75,000 15,000 60,000 400%
Fixed assets 21,600,000 20,000,000 1,600,000 8%
Accumulated deprec. (15,020,000) (15,000,000) (20,000) 0%
Reasearch & development asset 325,000,000 228,000,000
Accounts payable (210,000) (350,000) 140,000 -40%
Debt (None is current) (379,000,000) (380,000,000) 1,000,000 0%
Common Stock (1,000,000) (1,000,000) – 0%
Ret. Earn. (Accum. Deficit) BOY 124,964,998 40,814,998 84,150,000 206%
Revenue (178,270,100) – (178,270,100) #DIV/0!
COS 1,250,000 – 1,250,000 #DIV/0!
Selling expenses 1,500,000 – 1,500,000 #DIV/0!
General & administrative 18,000,000 25,000,000 (7,000,000) -28%
Interest expense 57,000,000 57,000,000
Insurance expense 500,000 1,500,000 (1,000,000) -67%
Depreciation expense 20,000 650,000 (630,000) -97%
(23,265,102) –
OTHER RELEVANT INFORMATION:
Purchase of fixed assets (1,600,000) Borrowings/ repayments of debt none
Sale of fixed assets none Non-cash investing & financing none

Sample Solution

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Overview
The goal of this assignment is to extend your understanding by using these new tools and questions to
examine and engage others. To put course concepts and ideas to work, you will interview an older person/elder
in your life about how race and/or ethnicity, along with nationality, class, ability, age, etc. – have shaped this
person’s sense of self, their world, and their opportunities.
Your aim will be twofold:
To identify and describe two or three defining moments in your interviewee’s life; and,
To deploy relevant course concepts drawn from course texts and discussions in order to make sense of the
dynamics at play in these moments.
Conducting the Interview
The interview process is straightforward:
Explain that the interview is part of a course assignment whereby you are interested in how identity frames
experiences. Explain that you will ask the person to provide background information as an introduction. Then,
you will ask them to share 2-3 defining moments in their life. Explain that you may ask follow-up questions that
engage course concepts. Ask permission to record if you plan to do so, or take notes on your conversation, but
you may also share written questions to get their responses.
Some questions to consider:
How would you describe yourself? What parts of your identity are most important to you? Which parts of your
identity do people notice most often? Do others ever make assumptions about aspects of your identity? What
makes you similar or different to others you know? (in your neighborhood, at work, etc.)
Talk about 2-3 defining moments in your life. What social and/or historical contexts are important to understand
about these moments? What aspects of identity contribute to how you (or others) understand these moments?
(eg., nationality, ethnicity, race, gender, class, urban/rural upbringing, religious/political affiliations)

Sample Solution

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