From: The Alchemy Inc. External Audit Team Date: September 23‚ 2008 Re: Internal Control Weaknesses Leave Alchemy Inc. Vulnerable to Errors‚ Fraud‚ and Abuse Internal controls represent an organization’s processes and procedures used to meet its goals and objectives and serve as a defense in safeguarding assets and preventing and detecting errors‚ fraud‚ and abuse. Effective internal controls provide reasonable assurance that an organization’s objectives are achieved through (1) reliable
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2003-2005 (Mergent‚2007) ‚ PWC discovered the fraud in 2006 audit after reviewing the internal auditor’s report‚ the report stated that the internal auditors found some errors in the company’s records. (Ricadela‚2007). So after applying the integrated audit by PWC‚ an unqualified opinion was given for the consolidated financial statements but on the other hand‚ a qualified opinion was given for internal control over financial records. PWC of course refused to be held countable for or responsible
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this paper a review of relevant academic literature. We also identify promising future research opportunities for the academic community. We specifically focus on how the communication process may affect overall financial reporting quality‚ internal controls‚ control environments‚ and external auditors’ performance‚ as well as matters that potentially impact financial reporting and should interest the PCAOB (e.g.‚ in the area of management discussion and analysis). We specifically link the findings from
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Goodner Brohers‚ Inc. 1. List what you believe should have been the three to five key internal control objectives of Goodner Brohers’ Huntington sales office. A. Goodner’s executives should focus more attention on internal control measures rather than volume in order to have operating activities with efficiency. Although sales volume is related to profits‚ the company could not scrimp on operating expenses. Goodner should make sure there is a good and healthy environment when achieving high
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financial statements and supplementary disclosures. | Question #2 (AICPA.921110AUD-AU) | | | As the acceptable level of detection risk increases‚ an auditor may change the | A. Assessed level of control risk from below the maximum to the maximum level. | | B. Assurance provided by tests of controls by using a larger sample size than planned. | | C. Timing of substantive tests from year end to an interim date. | | Performing substantive tests at an interim date increases the risk that
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According to the COSO framework‚ there are five elements can be applied to analyze companies’ internal control systems. They are control environment‚ risk assessment‚ control activities‚ information and communication and monitoring. Here is my research of what went wrong in internal controls during the 2008 financial crisis using exhibit 6-6 with Lehman Brothers. Control Environment Lehman Brothers has a long history. Fuld led the company tide over the difficulties several times and achieve remarkable
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1 Fraudulent use of corporate credit cards will be minimized by which of the following controls? A. Subjecting credit card charges to the same expense controls as those used on regular company expense forms. B. Periodically reviewing the validity of the need for credit cards at executive and operating levels. C. Establishing a corporate policy on the issuance of credit cards to authorized employees. D. Reconciling the monthly statement from the credit card company with the submitted copies of
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0.Introduction..............................................................................................3 2.0.Understanding of the client and its environment.......................................................................3 2.1.Internal Control.........................................................................................................................3 2.2.External factors understanding...................................................................................
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collect sufficient evidence‚ check internal control and substantiate computer system. The audit premise----- understanding internal control system AUS 402.41 requires the auditor to obtain an understanding of internal control relevant to the audit. The effective internal control can provide “protection against human errors and reduce errors or irregularities’ (Leung et al‚ 2007)‚ as well as provide reasonable assurance to auditors for relying on internal control to audit under limit of economic
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performing the audit work. - Due professional care – observance of the rules of professional ethics and CAS. Doing the work to the best of your ability Examination standards - Planning and supervising - Understanding the system on internal control of the business - Design procedures to detect fraud - Gather sufficient and appropriate (reliable and relevant) evidence/matter 1. Appropriate evidence are quantitative and qualitative 2. Objective and subjective
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