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Logistics and Transportation

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Carly Saxon

on 6 December 2014

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Transcript of Logistics and Transportation

Business Risks
Driver Hiring
Cargo Theft
Driver Hiring
Driver shortage has caused companies to lower hiring standards
Lack of drivers to fill seats in existing equipment
Decline in productivity of drivers due to Hours of Service Regulations
Increase in trucking company bankruptcies
Companies can be held responsible for theft, property damages, personal injuries, etc.
139,587 non-fatal accidents and 4,584 fatal accidents involved trucks in 2007
Can have difficult time defending their recruiting process in court
Should include:
Extensive background checks with a limit on moving violations and job changes
Driver training
On-road tests
76% of U.S. cargo theft
Competency of police
Outlandish cargo theft methods
Deceptive pickups
Facility burglaries
Driver thefts
“Having been in logistics for over thirty years, I trust no one… even the largest carriers have rogue drivers.” -Chris Jordan, Coyote Logistics
Decline carriers based on industry intel
Use variables to determine risky loads:
Day of week
Origin/ Destination
Cargo Value
U.S. Department of Transportation
Federal Maritime Commission
Transportation Security Administration
Bureau of U.S. Customs and Border Protection
Department of Agriculture
Department of Homeland Security
Federal Aviation Administration
New Legislation
Influence demand
Influence costs
Violations- Fines and Penalties
Failure to Comply
Prevent completion of service
Prevent delivery to customer
Regulations can lead to increase costs
Security costs to mitigate theft or terrorism
May not be able to pass along extra costs to consumers
Ways to Mitigate
Chief Compliance Officer
Emphasize driver/employee hiring and training
Hire third party firm to integrate compliance into operations
Why It's a Risk
Geographic Risk
Methods of Theft
Using Industry Data
Regulating Bodies
Effects of Driver Shortages
Driver Hiring Standards
The Importance of Quality Driver Hiring
Logistics and Transportation

Business Risks
Audit Risks
Audit Procedures
Advantages and Disadvantages
2 types: Capital and Operating
Capital - recognize on balance sheet
Operating - only need to be disclosed
Very complicated to calculate lease payments
New proposed standards will change the way leases are accounted for
Revenue Recognition
Definition: transporting products from the place of their origin to the end consumer
Overview Continued...
Wide variety of customers (credit approval procedures)
Analyze customer history
Frequency of short pays
Advantages and Disadvantages
State of the Industry
Highly competitive
U.S. logistics costs rose to $1.39 trillion in 2013, a 2.3% increase
As a percent of GDP, logistics has decreased for the second year in a row
Logistics Service
Air and Express Delivery Services
Freight Rail
1811- The word "logistics" appeared in literature
2000- U.S. Department of Labor gave classification to logistics as a profession
Globalization and Outsourcing
Manufacturing facilities moving near modes of transportation to reduce costs
Increased demand for warehousing
Audit Procedures
Examine original lease documents
Trace source documents to financial records
Audit Procedures
Cutoff Testing
Read Contracts
Audit Procedures
Analytical procedures
Inquiry of management regarding customer history
Vouching from general ledger to source documents
Always will be relevant
New developments
Big/well-known companies
Industry not keeping up with growth of the economy
Increased number of bankruptcies
Complex accounting (i.e. leases)
Heavy compliance
Your preference
Small Margin Industry
Vast Array of Services
Bundled Contracts
Judgement and Estimation
Change in Standards
Fun Fact
Maritime shipping is cheap. It's so cheap in fact, that rather than fillet its own fish, Scotland can send its cod 10,000 miles across the ocean to China to be filleted, and then have it sent back for less than the price of doing it themselves.
Audit Risks
Full transcript