Internal control ACCT504 Financial accounting and Managerial use‚ analysis Keller Graduate school of Management Professor : Linval Frazer Week 5: Case study 2 Friday ‚ April 4‚ 2014 Preparing LJB’s Internal Control Reporting for Public Trading Background LJB Company ‚ a small business local distributor who understands to go public in the future‚ the company should be in accordance with the law and may need to take more stringent internal control principles . At the request of
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Accounting Information Systems Simulation Summary Internal Control Systems are processes put in place to safeguard the company. In the simulation‚ the task was given to help a new company set up an internal control system‚ implement control procedures for specific internal control issues‚ and manage the internal control system as the company continues to grow. Ramos International is an up and coming luxury hotel in Chesapeake‚ Virginia. The role given in this simulation is that of the Chief
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1. Introduction Internal control is a very important internal governance mechanism for the modern enterprises‚ which is responsible to correct the error and prevent fraud‚ and ensure the healthy development of the company. The bankruptcy of Enron occurred in 2001 has made the U.S. and global focus on internal control. So the internal control evolving from a spontaneous governance mechanism to a system construction is a regulatory power driven by government. As important measures of the government
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Role of Internal Audit Function Nano Circuits Inc‚ is a publicly traded company that produces electronic control circuits‚ which are used in many products. In an effort to comply with SOX‚ Nano is in the process of establishing an in-house internal audit function‚ which previously had been outsourced. The company began this process by hiring a Director of Internal Audits. Nano Circuits’ CEO recently called a planning meeting to discuss the roles of key corporate participants regarding the implementation
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Summary The Trolley Dodgers was exposed that it had internal control problems existed. The other hand‚ found that employees embezzlement. The first part of this report identify and explain the characteristics of employee fraud indicated in Dodgers case. such as perpetrator must gains the trust or confidence of the person or company being defrauded. etc And then‚ the second part is explain the internal control weaknesses and understanding internal control objectives . The third part based on the understanding
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the SOX Act‚ Corporate Managers (CEOs‚ CFOs) are required to: 1) issue Internal Control Report beginning with the 2004 company annual report; 2) certify quarterly to the effectiveness of internal controls over financial reporting; 3) issue two opinions on internal controls on the annual report a) management’s assessment process and b) effectiveness of controls. Moreover‚ Section 404 mandated company reporting on internal control by management and independent auditors. What is the reasoning behind the
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studied the cash receipts and daily sales records. He soon realized that their trusted and long time employee‚ Betty‚ was stealing from the company and estimated her overall embezzlement at over $350‚000 (Knapp‚ 2011). 1. Identify the internal control concepts that the Levis overlooked or ignored. The Committee of Sponsoring Organizations (COSO)‚ formed in order to establish what businesses could do to improve financial reporting‚ is comprised of representatives from the Financial Executives
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Management’s personal financial situation is threatened 2. Opportunity to carry out the fraud a) Nature of the Industry or entity’s operations b) Complex or unstable organizational structure c) Ineffective monitoring of management d) Deficient internal control 3. Attitude or rationalization to justify fraud a) Nonfinancial management’s excessive participation in selection of accounting principles and estimates b) Excessive interest by management in stock prices and earning trends c) Committing to aggressive
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*risk can not be eliminated because not all of evidence being examine. Inherent Risk is a measure of the auditor’s assessment of the likelihood that there are material misstatements in account balance before considering the effectiveness of internal control. If the auditor concludes that there is a high likelihood of material misstatement in A/R due to changing of economic conditions‚ the auditor concludes that inherent risk for A/R is high. Planning an Audit and Designing an Audit Approach I. Accept
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Audit Planning: Assessment of Control Risk MULTIPLE CHOICE: 1. Which of the following is ordinarily considered a test of internal control procedures? a. Send confirmation letters to banks. b. Count and list cash on hand. c. Examine signatures on checks. d. Obtain or prepare reconciliations of bank accounts as of the balance sheet date. ANSWER: C 2
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