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As part of an audit engagement, you have been assigned the task of documenting the internal control system for the BrownSole Shoe Store. The business is operated by a single owner, who operates the store daily with only two additional employees who help out in everything, from stocking new shoes, to helping customers, to bill paying and accounting.

The owner, Majorie Renalwald, is a very stubborn person with little business education. She very much needs a set of audited financial statements in order to obtain a loan, but at the same time she seems very irritable and not especially interested in working with you.

Your first experience with her was a 10:00am appointment with her the other day. You sat in the back of the store, in a small storage room, and waited for one hour while she talked on the telephone to her daughter in London. Then after allowing you ask her only one or two questions, she abruptly told you that she was late for a hair appointment.

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Describe the approach you will take in dealing with Majorie Renalwald. Which systems techniques will you use, and what order will you use them in?

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Describe the approach you will take in dealing with Majorie Renalwald. Which systems techniques will you use, and what order will you use them in.

The approach that you should take is as follows:

The first step in documenting the internal control system is to find out if there is a plan for internal control systems. It does not matter if Majorie Renalwald does not answer your questions, you should proceed with questioning the two other employees and documenting any plan that Majorie Renalwald for the internal control system.

Your second step should be to enquire about the control framework in the organization. You may ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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