Phases of Control Evaluation ACC/544 Bunney Schmidt January 28, 2013 The purpose of the internal control evaluation is to assess control risk and provide useful information to management and directors for carrying out the company’s control mission (Louwers, Ramsay, Sinason, & Strawser., 2007). The first phase of the audit cycle is to understand and document the client’s internal controls. This phase introduces the auditor to the client’s control environment and management’s risk assessment
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re-hiring. Question 2: I don’t believe that the anti-harassment policy and complaint procedure qualify for internal controls, as they are just procedures and guidelines for preventing harassment and racial discrimination within the company, but they don’t involve the members of the organization and do not constitute of a process, but merely of guidelines. COSO defines internal control as “a process, effected by an entity’s board of directors, management and other personnel. This process is designed
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of the auditor WHAT IS AN AUDIT?[1] The word “audit” comes from the Latin word audire which means “to hear” because, in the middle Ages, accounts or revenue and expenditure were “heard” by the auditor. An audit is the process of checking that the way an organisation presents information about its financial position (its ‘Financial Statement of Accounts’) is true and fair. In essence, ‘true and fair’ means that, in the auditor’s opinion, the company’s financial statements offer a true and fair
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Case 13-9 ZOU’s Fencing Controls ZOU Fencing Inc. (ZOU Fencing or the Company) is a public company in the United States that files quarterly and annual reports with the SEC. ZOU Fencing has five manufacturing facilities located in Missouri and produces and provides chain-link fencing to customers throughout the Midwest (Wisconsin, Indiana, Michigan, Ohio, Illinois, and Iowa) via rail car. ZOU Fencing sells chain-link fencing to customers under free on board (FOB) shipping point terms. Therefore
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those outside of the business (ex: the bank associated with the business). d. Inherent risk is increased: The determination of reliability must be done with a much greater deal of care, as there is now a higher chance of material misstatement. e. Control risk is decreased: The auditor would be able to place a heavier reliance on documents created and used internally (i.e. not reviewed by outsiders). 2) Inquiry of knowledgeable persons within or outside the entity a. Nature: To obtain sources of
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a) Several internal control procedures were violated in this case due to the success of Adam Kimble. The following is a list of the violated procedures: separation of duties, bonding of employees, requirement of extended absence, pre-numbered documents, and performing evaluations of inventory and documentation at regular intervals. First, separation of duties between two or more individuals reduces the opportunities for either employee to defraud the company. It is difficult for two employees
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------------------------------------------------- Smackey dog food Auditing [Date] tamucc [Company address] [Date] tamucc [Company address] Smackey Dog Food is a family owned and operated company that began as a dream of two sister’s and its meager beginnings were established in the kitchen of their home. The business has become more profitable and thus the sisters have a need to expand the business into a larger facility. There was a need to hire additional employees in order to
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action agencies to aid in reducing the amount of corporate mishandlings. Regulatory legislation mandating a report on internal controls is now a corporate obligation. Risk management is a fundamental area of importance to stakeholders. Organizations that are best practice companies look to the Committee of Sponsoring Organizations for guidance to develop efficient internal controls, enterprise risk and against fraudulent activities. This paper will outline a plan to implement enterprise risk for
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any point in time which lists all ledger account and the balances are used to provide the equality of debits and credits. Assets are listed first followed by liabilities and then owner’s equity. The trial balance proves that the accounts balance, but does not ensure that all transactions were entered or entered in the proper accounts. At Huffman Trucking we have decided to integrate an automated accounting information system (AIS) using internal controls to ensure the correct data and information
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Audit Risk = Inherent Risk x Control Risk x Detection Risk Inherent Risk is one of the major items or topics that are a part of auditing and here is what I have found. It is considered to be a risk of material misstatement in the financial statements arising due to error or omission as a result of factors other than the failure of controls. Factors that may cause a misstatement due to absence or lapse of controls are considered separately in the assessment of control risk. Inherent risk is also
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