BUS 4068 Unit 2 Assignment 1 Accounting Information Systems
47. Betty Website, the company’s controller, assesses the internal control processes and determines them to be adequate. However, she identifies a disconnect between the internal control structure and the company’s enterprise risk management (ERM) system.
At the organizational level, the risks associated with integrating ERM with internal control processes may fall within a broader scope that can only be addressed or controlled by higher authorities or decision-makers. It’s important to note that the person responsible for risk management in ERM is different from the CEO, who oversees the internal control process and has direct involvement.
BUS 4068 Unit 2 Assignment 1 Accounting Information Systems
Certain factors related to ERM are not directly tied to internal control processes:
- Auditors may not utilize the wide range of risks the ERM covers when assessing internal control processes.
- Additionally, ERM primarily focuses on potential future events, while internal control focuses on past errors or frauds within the company.
- I respectfully disagree with Maria Salzo’s statement because, regardless of how many accounting systems detect fraud and errors during the accounting process, the reliability of financial statements cannot be assured without reasonable assurance. Internal control serves as the initial filter to identify mistakes.
Accounting Information Systems
Is it unrealistic to aim for the complete prevention of financial statement fraud?
Fraud is a highly creative crime that often requires cunning minds, making it nearly impossible to prevent it entirely. By the time effective measures are developed, new methods of fraud may emerge. The responsibility for fraud prevention lies with management. In some areas, fraudulent behavior may, unfortunately, be tolerated or even institutionalized.
BUS 4068 Unit 2 Assignment 1 Accounting Information Systems
The auditor should plan the audit in a way that reasonably expects to detect material misstatements arising from fraud and errors in the financial statements.
Could this objective be partially achieved if the internal auditor reports to the chief executive officer?
While it is possible to complete this objective partially, it would require additional time. The auditor should be accountable for all documentation disclosed in the financial statements, as the company may undergo a comprehensive external audit at any point in its lifespan.
- Barbara Minker, the owner of Fall Down Construction company, specializes in residential construction within new gated communities. The company comprises one accountant, a secretary, twelve job managers, and two hundred workers. Currently, the company is hiring new workers, which the job managers handle.
Accounting Information Systems
The job manager supervises a site where new work is required and has the workers fill out detailed forms. These forms must be submitted to the accountant every Monday and Wednesday for payroll processing.
BUS 4068 Unit 2 Assignment 1 Accounting Information Systems
On Thursday, each manager provides the accountant with a payroll report, including individual timesheets for each worker. The accountant then prepares payslips, which are handed over to the secretary. The secretary verifies the total amount and withdraws cash from the bank to distribute to the job managers to pay the workers.
Several measures must be implemented within the hiring department to ensure effective internal control. These include conducting thorough background checks on workers hired by job managers, verifying payrolls before making payments to workers, acting surprise site visits to confirm workers’ presence as documented in payroll and hiring records, and ensuring that all new hires receive approval from higher authorities rather than solely relying on job managers.
