Question

w ways the external the internal auditors 7-34 Randall, Inc., is a private company that may The company has an active audit committee audit committee consists of two outside du company chief financial officer. The audit co provide oversight of financial reporting, in accounting policies and unusual transactio reviews and approves any related-party operating units are performed by company that manufactures heavy machinery active audit committee and board of director two outside directors and Howard Kress, the The audit committee meets quarterly to al reporting, including reviewing new al transactions. Howard Kress personally ted-party transactions. Internal audits of performed by the internal auditor, who reports ecly to Laura Howe, the chief operating once ting officer. The company has a w adhere to the code when they are hired. 1 for confidential reporting of un corporate controller. The audit com mcidents and investigations performed. Required: Identify the weaknesses and provide suggestions for answer as follows: le of conduct, and employees agree to are hired. The company also has a hotline orting of unethical behavior that is staffed by the audit committee reviews summaries of all we weaknesses in Randall's system of corporate governance suggestions for improvement in the system. Organize your Recommended Improvement

Auditing

Answer 1

Weakness :

Reviewing each of the audits personally is time consuming and the CFO won't be able to review his own audit, since that would give rise to ambiguity.

Recommended Improvement:

• Rather than being reviewed by the Chief Financial Officer himself, the transactions should be reviewed and approved by an unbiased third party or the entirety of the audit committee.
• The company should hire specialized auditor(s) for not only internal audits but also for the related party transactions.