Question

Create a scenario where external auditors determined that a company's internal controls were deficient, but such a deficiency might not mean that a material weakness existed. Ascertain the impact on the audit plan if additional deficiencies are discovered on other related internal controls. Support your position. Use the Internet or Strayer Library to research at least two (2) accounting scandals within the past five (5) years. Based on the accounting scandals you researched, identify the accounts that the fraud had affected, and analyze the auditor’s responsibility to detect fraud. Next, suggest key internal controls that would have either prevented or detected the fraudulent behavior or transactions. Justify your response.

Answer 1

ANSWER :-

1. Allow us to take a situation like stock valuation and obsolete quality where the external commentators derive that the association's inside control process is low as the copay just takes a quarterly physical check and does the examination of best 20 high usage stock things.
2. In any case the association investigated the customized stock posting system by weighted moving typical cost for rough materials and standard cost for Finished items and WIP.
3. The figuring and posting framework is wonderfully arranged and aside from if there is data area bumble , there is less probability of valuation botch.
4. Here the examiners found that completely material inadequacy in stock valuation system is there yet to look at and control of date quality the association must do month to month check cut down cost or market regard test for the moderate moving and significantly esteem capricious things.
5. Evaluators may settle on doing some precedent checks a this zone and administer suitable time for that.
6. On the other hand , allowed us to expect that some control needs in Finished Goods stock valuation for the month end closing found.
7. All over the stock have been invoiced and conveyed yet charging has not been done and on occasion charging has been done anyway dispatching not done and the FG counted in physical count and stock extended.
8. The evaluators found the need to finish a significant bounce into this district to find the inconspicuous components of strategy for working and the inward control present.
9. The surveys will change the audit plan to commit greater chance to check the month end FG stock accounting process stream, check the controls existing and the obligation arrange for ensuring passed on items are charged and charged stock are passed on or kept in a separated locale in store to keep up a key separation from work up in counting.
10. The commentators will in like manner check the records of all of the month closes for latest a year to find any material mistake in stock valuation of FG. In this way with the disclosure of a couple of deficiencies , the whole audit plan ought to be acclimated to research the zone of possible inside control inadequacy.

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