criteria for internal controls has been established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). “The COSO internal components include the following: 1) Control Environment‚ 2) Risk Assessment‚ 3) Control Activities‚ 4) Information and Communication 5) Monitoring” (Arens‚ Elder‚ & Beasley‚ 2007‚ p. 294). AOW has followed the criteria set forth by COSO and also by generally accepted auditing principles for the purpose of expressing an opinion about the financial statements
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REVIEW QUESTIONS 1. Why did Nick Leeson sell numerous short straddles for each long futures contract he bought? When Nick Leeson was being promoted on the Singapore branch of the Barings bank‚ the strategy of the bank was to reduce the risk exposure by using a combination of one short straddle (combination of put / call) and for one long future. Since Nick Leeson used to be a specialist on Future contracts on Nikkei 225 and Japanese 10 years bond and was sure this market would arise. So
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a robust professional judgment process. A good judgment process followed consistently can help improve decision-making and oversight‚ but “traps and biases” can undermine the process. Consider using a formal judgment process as described in the COSO paper (adapted from KPMG’s Professional Judgment Framework): 1) define the problem and identify fundamental objectives; 2) consider alternatives; 3) gather and evaluate information; 4) reach
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According to board structure‚ the difference of corporate governance among different countries is may be unitary or dual board on the country. In the UK and the USA‚ a unitary board of directors in the form of board structure‚ characterized by one single board comprising executive and non-executive directors. (Aguilera‚ 2003) It is responsible for all aspects of the activities of the corporation. A dual board of directors is including a supervisory board and executive board of management. Nevertheless
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Committee of Sponsoring Organizations of the Treadway Commission (COSO). Students apply the business law principles they have studied throughout the course to create a corporate compliance plan that identifies the legal aspects that management must address. In preparing the plan‚ students must apply all of the key concepts discussed throughout the course; in particular‚ the affect that the Sarbanes-Oxley Act has on the Riordan and how COSO guidelines can assist with compliance. Resources Required
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this just made it harder for fraud to occur. There were and still are several grey areas that the players involved exploit. 2. Name and briefly describe the five components of COSO’s internal control framework. (10 points) The five components of COSO are as follows: a. Control Environment: Basically means that the leaders of the organization set the tone for ethics and enforce them with a code of conduct followed by consequences when not abided by. b. Risk assessment: this just means they check
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Csc θ = 5/3 cos θ = 4/5 sec θ = 5/4 4sinƟcosƟ + 2√3 sinƟ – 2√3 cosƟ – 3 = 0 (4sinƟcosƟ + 2√3 sinƟ) – (2√3 cosƟ + 3) = 0 make it into two groups. Attention! Be careful with your sign! 2sinƟ(2cosƟ+√3) – √3(2cosƟ+√3) = 0 for each group‚ factor out the common factor (2cosƟ+√3)(2sinƟ – √3) = 0 we have (2cosƟ+√3) as my common factor‚ so I can factor it out. 2cosƟ+√3 = 0‚ 2sinƟ – √3 = 0 cosƟ = – √3/2‚ sinƟ = √3/2 Then‚ you can draw the unit circle to find the
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References: Applegate‚ D. (1999). Struggling to incorporate the COSO recommendations into your audit process? The Institute of Internal Auditors. Retrieved January 9‚ 2010‚ from http://www.cosco.org/audit_shop.htm COSO-Committee of Sponsoring Organizations of the Treadway Commission home page. Retrieved January 9‚ 2010‚ from http://www.coso.org/default.htm Jennings‚ M. (2006). Business:
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ethical values and competence of the entity’s people. (coso) Top management of LBJ Company should make it clear that the company values integrity and that unethical behavior will not be tolerated. Risk assessment – The organization must identify and analyze the different factors that generate risk for the business and must decide how to manage these risks. Because economic industry‚ regulatory and operating conditions will continue to change. (coso) Information and Communication –
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and Risk Evaluation Internal controls are an integral part of a company to provide a foundation for a safe‚ sound and successful organization. According to COSO‚ “the three primary objectives of an internal control system are to ensure efficient and effective operations‚ accurate financial reporting and compliance with laws and operations” (COSO‚ 1999). Proper internal control programs can help Kudler’s managers to make decisions‚ progress evaluations and mitigate risks‚ however‚ all risks will not
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