I'm requesting answer only when know exactly 735. Describe the relationship between controls and the prevention of regulatory fines, penalties, and legal liabilities.
Added by Alexis H.
Step 1
Let's think step by step. Show more…
Show all steps
Your feedback will help us improve your experience
Akash M and 64 other Physics 102 Electricity and Magnetism educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
In May 2018, a local chemical plant had an unfortunate accident. Chemicals leaked from a plant holding tank and seeped onto the parking lot. A number of employee vehicles were damaged and required repainting. The company agreed to reimburse employees for the cost of these repairs. Employees were instructed to submit their bills for the repairs to the Controller, Jim Bemond. Jim would then issue a check to the employee for the amount of the bill. While the Internal Auditor Director questioned the Audit Committee about the monitoring of the reimbursements during a meeting a month after the accident, the Committee determined that procedures in place were adequate. Nine months later, at a full board meeting, someone made a remark about the fact that bills were still being turned in for reimbursement. By this time, the total of the damages reimbursed to employees had reached nearly $150,000. After making inquiries, it was discovered that some of the "repairs" were for expensive paint jobs, upgrades, buffing, body repairs, and waxing. Further investigation revealed that thousands of dollars were reimbursed for paint jobs on cars that were damaged prior to the industrial accident. Moreover, some employees had turned in bills for similar jobs just a few months apart - in other words, some cars were reimbursed for the same repair twice. Although this appeared suspicious, no one caught it until the internal auditors came in one year after the accident in response to the board's inquiry and reviewed the invoices and compared them with the employee list and cars repainted. Answer questions 1-3 below with reference to COSO's Control Activities, Information and Communication and Monitoring Principles and corresponding Focus Points. What important control activities are missing? 2. How should have the policy concerning the reimbursements been communicated to the employees? 3. What monitoring controls should have been put in place to detect if the policy was being abused? Control Environment considerations: 4. This fraudulent activity was not material to the financial statements, however, the event has an effect on the culture of the organization. What does management need to do now that the fraud has been discovered? 5. What is the Board of Directors responsibility now that the fraud has been discovered? 6. What control environment principles are lacking or ineffective?
Akash M.
Texts: 10-33 (Objective 10-3) Following are descriptions of ten internal controls. Required: Indicate which of the five COSO internal control components is best represented by each internal control. 1. The company's computer systems track individual transactions and automatically accumulate transactions to create a trial balance. 2. The company must receive university transcripts documenting all college degrees earned before an individual can begin their first day of employment with the company. 3. Senior management obtains data about external events that might affect the entity and evaluates the impact of that information on its existing accounting processes. 4. Each quarter, department managers are required to perform a self-assessment of the department's compliance with company policies. Reports summarizing the results are to be submitted to the senior executive overseeing that department. 5. Before a cash disbursement can be processed, all payee information must be verified by matching the payee to the company's approved vendor listing. 6. The system automatically reconciles the detailed accounts receivable subsidiary ledger to the accounts receivable general ledger account on a daily basis. 7. The company has developed a detailed series of accounting policy and procedures manuals to help provide detailed instructions to employees about how controls are to be performed. 8. The company has an organizational chart that establishes the formal lines of reporting and authorization protocols. 9. The compensation committee reviews compensation plans for senior executives to determine if those plans create unintended pressures that might lead to distorted financial statements. 10. On a monthly basis, department heads review a budget to actual performance report and investigate unusual differences. a. Control environment b. Risk assessment c. Control activities d. Information and communication e. Monitoring
ERROR RECOGNITION (A)Administering by governmental agencies and (B)regulatory agencies, financial regulation and oversight (C)aim to maintain the stability and (D)fairness of financial markets.
Donna D.
Recommended Textbooks
University Physics with Modern Physics
Physics: Principles with Applications
Fundamentals of Physics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD