With respect to item #2, there is no doubt that Acme is a complex organization. A companion with both domestic and international manufacturing operations that does business in over fifty countries and with an average annual sales add-on of 26 percent is a complex business. The preliminary abbreviation suggests this complexity is appropriate to the nature of the business, and complexity alone is non evidence that the control environment is inadequate.
Acme has had higher than evaluate turnover recently, but has had historically lower levels of turnover in key positions.
Rather than adopting aggressive accounting policy choices, it appears that worry is risk averse, and that it takes adequate time to assess potential risks onward acting. It also appears that Acme is conservative in revenue recognition, and that man the accounting function is decentralized there is adequate backsliding by senior focus including the CFO and the CEO. It is also tell that accounting personnel have a responsibility to depict issues or concerns to the centralized monetary officers of the company.
With respect to item #4, earlier than place pressure on management and operating personnel, the woodland at the top is one of fairness and integrity. The way management has dealt with potential defective products and environmental hazards is an example of
Of particular note is the fact that the board of directors recognizes the vastness of the chief internal auditor, and both the audit and compensation committal are involved in establishing the compensation of this individual as well as decisions relating to his or her continuing employment. However, it should be noted that management bonuses are tied to short-run financial work targets.
This memo reviewed the results of the preliminary assessment of the control environment and pseud risk assessment for Acme. There are indications of weaknesses in received areas that require additional scrutiny.
The most notable of these involve the problems associated with safeguarding refractory assets against misappropriation. Acme needs to do more to reduce the likeliness of fraudulent financial reporting.
management's commitment to integrity over short-term profit. Another positive sign involves the fact that the compensation externalise is structured in such a way that it does not tempt employees' ethical values. It is also noteworthy that the compensation charge of the board of directors reviews and approves all management incentive plans.
Conclusion: disposed(p) the problems found in this preliminary assessment, no clear conclusions grass be made about the risk of financial misstatements establish on fraudulent financial reporting. More analysis allow be required to determine whether or not the financial statements presented are fraudulent, and additional research will need to be done to determine to what extent there has been misappropriation of assets at ACME.
The practice of the human resources department of doing complete background checks on candidates for employment is an appropriate control mechanism, especially since this process include
Order your essay at Orderessay and get a 100% original and high-quality custom paper within the required time frame.
No comments:
Post a Comment