(Objectives 10-3, 10-5) Frank James, a highly competent employee of Brinkwater Sales Corporation, had been responsible for accounting-related matters for two decades. His devotion to the firm and his duties had always been exceptional, and over the years, he had been given increased responsibility. Both the president of Brinkwater and the partner of an independent CPA firm in charge of the audit were shocked and dismayed to discover that James had embezzled more than $500,000 over a 10-year period by not recording billings in the sales journal and subsequently diverting the cash receipts. What major factors permitted the embezzlement to take place?
Objective 10-3
Explain the five components of the COSO internal control framework.
Objective 10-5
Assess control risk by linking key controls and control deficiencies to transaction-related audit objectives.
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