Introduction: ABC Corporation is a manufacturing company that produces and sells consumer electronics. To ensure the effectiveness and efficiency of its expenditure cycle processes, ABC Corporation has enlisted a group of students to conduct an internal control assessment. The students' task is to identify control weaknesses in the expenditure cycle and propose recommendations to address these vulnerabilities.  Scenario: ABC Corporation's expenditure cycle encompasses various stages, including requisitioning, purchasing, receiving, and accounts payable. The company utilizes an integrated enterprise resource planning (ERP) system to manage these processes.  Question 1: What control weaknesses can you identify in ABC Corporation's receiving and inspection process that may result in incorrect recording of received items, acceptance of damaged goods, or potential theft or misappropriation of inventory?

The operation manager of Marcoba Bhd is seeking your advice on his company's request for a computer software to be used in managing the sales of the company. He is unsure of how to obtain the computer software but realizes that different types of acquisition will impact the company's financial statement differently. He is considering the following possibilities: a) Making a purchase of the computer software externally. The quotation that he has received includes packages for payroll and general ledger. b) Making a purchase of a computer software that can be incorporated into a sales system that the company will develop. c) Signing a contract with independent programmers to develop a computer software that will specifically cater for Marcoba Bhd's own use d) Employing own programmers to write a computer software that the company will use. Required: Advice the operation manager on the impact of each possibility above on the company's financial statement

Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose’s control environment. Required: a. Identify additional control environment factors (excluding the factors illustrated in the following example) that set the tone of an organization, influencing the control consciousness of its people. b. For each control environment factor identified in part (a), describe the components and why each component would be of interest to the auditor. Use the following format: Integrity and Ethical Values The effectiveness of controls cannot rise above the integrity and ethical values of the people who create, administer, and monitor them, Integrity and ethical values are essential elements of the control environment, affecting the design, administration, and monitoring of other components. Integrity and ethical behavior are the products of the entity's…

AMI International is a large office products company. Headquartersmanagement imposed pressure on operating division managers to meet profit forecasts. The division managers met these profit goals using several accounting manipulations involving the record-keeping system that maintained all transactions and account balances on computer files. Employees who operated the computer accounting system were aware of the modifications of policy the managers ordered to accomplish the financial statement manipulations. The management and employees carried out these activities:1. Deferred inventory write-downs for obsolete and damaged goods.2. Kept open the sales entry system after the quarterly and annual cutoff dates, recording sales of goods shipped after the cutoff dates.3. Recorded as sales transactions that had been coded as leases of office equipment.4. Recorded shipments to branch offices as sales.5. Postponed recording vendors’ invoices for parts and services until later, but the actual…

You are currently working in a mid-tier accounting firm. In an engagement meeting with a client, the management of your client is concerned that the audit tests that you perform will disrupt operations. Your client has recently implemented a data warehouse and the management suggests that you draw the data for analytical reviews and substantive testing from the data warehouse instead of the operational database. The management points out that operational data are copied weekly into the data warehouse and all data you need are contained there. Q. Outline your response to the management’s proposal and mention any concerns you might have.

Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose's control environment. Required: a. Identify principles of internal control (in addition to the factors illustrated in the following example) that set the tone of an organization, influencing the control consciousness of its people. b. For each control environment factor identified in part (a), describe the components and why each component would be of interest to the auditor. Use the following format: Integrity and Ethical Values The effectiveness of controls cannot rise above the integrity and ethical values of the people who create, administer, and monitor them. Integrity and ethical values are essential elements of the control environment, affecting the design, administration, and and behavioral standards, monitoring of other components. Integrity and ethical behavior are the products…

One of your Firm’s Managers, Colin Cronen is responsible for the auditing the financial statements of the Roman Corporation, which has a batch-processing IT-based system for shipping and invoicing that it purchased from a software vendor. The following comments have been extracted from Cronen’s notes on IT operations and the processing and control of shipping notices and customer invoices. Each type of computer run is assigned to a specific employee who is responsible for making program changes, running the program, and answering questions. This procedure has the advantage of eliminating the need for records of IT operations because each employee is responsible for his or her own computer runs. At least one IT department employee remains in the computer room during office hours, and only IT department employees have keys to the computer room. The corporation considered the desirability of program controls but decided to retain the manual controls in place prior to the conversion to the…

Regarding Murphy Ltd: Three (3) account areas that are at risk of material misstatement. For each account area identified above, one (1) key assertion that could be at risk. The audit procedures you would perform to gather sufficient appropriate evidence for each assertion Murphy Ltd Finally, Wayne tells you about Murphy Ltd, a large client with a diverse set of operations.  During Wayne’s audit of Murphy he found the following: Murphy manufactures wheat, yeast and various other goods needed to bake bread which it exports to bakers in Saudi Arabia. Recently the Saudi Arabian currency (Saudi riyal) has fallen in value and a number of Murphy’s customers are unable to settle their accounts. By the end of the year, Murphy is expecting to have outstanding receivables in excess of $1 million. Murphy also manufactures soft drink. Part of Murphy’s agreement with its distributors is that Murphy will supply fridges and advertising signs for the distributors to use. These fridges are rented to…

Is the following a potential control weakness?  A computer network and personal computers support Marco accounting and inventory management systems. Personal computers are located in the offices and warehouse and a central server handles all accounting and inventory files. Printers are located in areas where employees need printed documents and other records routinely. The computer is used to control and process most transactions, to print documents, prepare accounting records, and prepare periodic financial statements. Marco uses commercial software recommended by their auditor. To date, they have had only the usual startup problems. They have used it for two years and have upgraded it once. Briefly explain the potential mistatement and recommended correction.

In the evaluation of sales transaction processing and control design in the following information:(a)identify two or three potential weaknesses. breifly explain the potential mistatement, recommended correction and possible weakness of all two or three potential weaknesses identified. ORDER APPROVAL In Marco Appliance Inc., Every few minutes (immediately if things are slow), one of the salesclerks hand-carries the pending requisitions to Dakota Amalia, the controller. The secretary presents them to Ms. Amalia who approves them either immediately, based on first-hand knowledge of the customer's credit record, or after reviewing the customer's account record on her PC. Ms. Amalia initials the requisition to indicate approval of the sale and enters an approval for the requisition in the accounting system. When Ms. Amalia enters her approval code, the system creates and prints three copies of a sales order form; assigns a sequential number to it; and moves the sales order record in the…