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Internal Controls

Internal Control Systems: Example Problem

The FCPA, COSO, and SOX, (just to name a few), covered corporate internal controls addressing different aspects. In addition IT has established their own internal controls that address the IT specifics and called 'COBIT'. Is it possible to have one internal control system that applies to all companies under the same industry?

Internal control weaknesses

Consider each of the following situations independently: a) The accounts receivable clerk opens the mail, records the cash receipts, posts the customer accounts, then forwards the cheques received to the cashier for safekeeping until they can be deposited by the assistant controller. b) All plant employees are required to

Comprehensive Argument: Internal Control System

During an audit, you have identified that because of a weak internal control system, an adjusting entry for prepaid insurance was not recorded for the first 3 months of the year at $500 per month. Please Identify the limitations of the internal control system. Provide at least 3 limitations. Provide at least 2 examples of

Internal Controls Related to Cash

What are some internal controls related to cash? Why is control over cash important? What are the pros and cons of segregation of duties over cash? Why is a bank reconciliation considered an internal control over cash? How does it provide control? What control violations might the bank reconciliation highlight?

Reporting on Internal Control: Public Companies

The profession has argued for decades about the advisability of mandatory reporting on internal control by public companies and by governmental entities. In the 1970s and 1980s, the main players in the debate were the Commission on Auditor's Responsibilities (the Cohen Commission), the AICPA, and the SEC, among others, and their

Control limits for computer diskette manufacturer

A computer diskette manufacturer is concerned that some diskettes have bad sectors that would cause a diskette to hold less information than it was intended to hold. In the past, only 5% of these diskettes have had bad sectors. If the company wishes to set 99.7% control limits based on samples of size 500, what would these lim

Limitations of Internal Control System

Scenario: You are an accountant at a local CPA firm that is auditing the accounting records of XYZ Company. You have been asked to educate the accounting department about the limitations of the internal control system in preparation for an upcoming audit. During your audit, you have identified that because of a weak internal con

Internal Control: Preliminary Analytical Procedures

1. Internal control is a process effected by an entity's board of directors, management, and other personnel that is designed to provide reasonable assurance regarding the achievement of objectives. (True/False) 2. What are the two main objectives for conducting preliminary analytical procedures?

Primary purpose of an internal control system including three objectives

1. Summarize the primary purpose of an internal control system? 2. What are the three internal control objectives for financial reporting? 3. What are the accounting regulatory bodies, and discuss how the organization complies with the standards of the regulatory bodies that were selected.

Identify strengths and weaknesses of Mt. Hood's internal control

Identify strengths and weaknesses of Mt. Hood's internal control and give suggestions for each weaknesses. 1. Mt. Hood has identified a small group of office furniture dealers whose operations have deteriorated to the point that their ability to repay the company is doubtful. The company has decided to make additional shipmen

Justification for an Internal Control System

Leadership confronts you as a controller and questions the need for an internal control system. Write a report justifying the need for this system when controls are already in place with insurance and portfolio approach. Explain why current approaches are valid but why an internal system will be more beneficial. You need

Internal Control (Brown Company)

Brown Company provides office services for more than 100 small clients including: A. Supplying temporary personnel B. Providing monthly bookkeeping services C. Designing and printing small brochures D. Copying and reproduction services E. Preparing tax reports Some clients pay cash for these services, some have a 30-day ch

Transaction Processing and the Internal Control Process

Required (a) What caused the large increases in postal expense at WDI? How could such large increases have escaped management's scrutiny? (b) Suggest changes in WDI's accounting system to prevent similar situations from occurring in the future. (c) What steps should WDI take to bring postal expenses under management co

Control Mechanism Paper

A. Identify four types of control mechanisms (ways controls are applied) used in Walt Disney. b. Compare and contrast these control mechanisms. use at least 2 references.

The solution to Internal Controls

What is the purpose of internal control? Why is internal control important? How can internal controls help or hinder a company's success? Define, explain, give examples and be specific. What governing bodies are responsible for establishing financial reporting parameters? What is their purpose? Which body is the most importan

BrownSole Shoe: Procedures to document the internal control system

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 p

What is the purpose of internal control? Why is it important?

What is the purpose of internal control? Why is internal control important? How can internal controls help or hinder a company's success? Who is responsible for establishing internal controls within the organization? What are some examples of effective internal controls? How can a company determine if the internal controls are e

Principles of internal control

Identify 6 principles of internal control. Give examples for each principle that might be observed when picking up pizza.

Segregation of duties for TameBird: accounts receivable and accounts payable

The size of an entity can affect the components of internal control. Segregation of duties is a control activity that is important for adequate control. The following example presents a scenario where the auditor can provide assistance to the entity in establishing proper segregation of duties. TameBird Industries produces