InWeek 1, you selected a publicly traded company with internal control weaknesses.This week, answer the following questions in a 4- 6-page Microsoft Word document based on your findings about the...

1 answer below »



InWeek 1, you selected a publicly traded company with internal control weaknesses.




This week, answer the following questions in a 4- 6-page Microsoft Word document based on your findings about the company.




Be sure to include how the company became compliant with the Sarbanes-Oxley Act after the fraud was found.







  • Examine how the auditor and the management could have uncovered the material weakness you found.



  • Distinguish who is responsible for identifying, disclosing, and improving the internal controls.



  • Comment on why the auditor and the management have the responsibility of disclosing the internal control weaknesses and to whom they would be liable if these were not properly disclosed. Be sure to relate some of the prior readings from the text.



  • Describe the audit risk model and each of its components.



  • The following are four situations involving the audit risk model as used by your company for planning audit evidence requirement since the audit of its inventory. For each situation, calculate the planned detection risk.







































































































































Situations















1







2







3







4







Acceptable audit risk







1%







10%







10%







5%







Inherent risk







100%







100%







50%







20%







Control risk







100%







100%







40%







30%







Planned detection risk







?







?







?







?










  • In practice, auditors assess the audit risks (inherent, control, and planned detection) as high, medium, or low. For each of the four situations below, fill in the blanks (with the words high, medium, and low) for planned detection risks and the amount of planned evidence you would intend to gather.




























































































































































Situation















1







2







3







4







Acceptable audit risk







Low







Low







High







High







Inherent risk







High







Low







Low







Low







Control risk







High







Low







Medium







Low







Planned detection risk







Planned evidence










  • Consider a situation in which your company’s retail store manager receives an annual bonus based on store sales. At the end of the Christmas holiday season, the store manager instructs his subordinates and store personnel not to process $300,000 of store returns until the end of the company’s fiscal year (which was a few weeks after the calendar year).






Based on the above situation, answer the following questions:







  • Do the instructions given by the store manager to the subordinates reflect fraud?



  • What is the internal control weakness here and why?



  • What financial statements do you think were reported in error without these store returns and why?



  • What could be done to avoid these types of errors and irregularities?









Support your answers with scholarly research, examples, and evaluation and present them in the APA format.


















Answered 5 days AfterMar 05, 2023

Answer To: InWeek 1, you selected a publicly traded company with internal control weaknesses.This week, answer...

Nitish Lath answered on Mar 11 2023
38 Votes
Compliance with Sarbanes Oxley Act
Apple Inc. has complied with all provisions of the Sarbanes Oxley Act, of 2002 and has not deviated from any provision of law. The act was introduced in the USA post-Enron s
candal and all publicly traded companies were required to disclose more facts in their annual report to shareholders. The SOX provisions state that CEO and CFO should review the financial statements and are responsible for the effectiveness of internal controls (Josh Fruhlinger, 2020). Further, the entities should also disclose and include all off-balance sheet items periodically and the board of publicly traded companies should have independent directors. In the case of Apple Inc., the company has disclosed all off-balance sheet items in the annual report, and its board of directors is also majorly comprised of independent directors. Further, all the committees of the board are formed and headed by independent directors, and financial reports are approved by the independent audit committee. Thus, Apple Inc. has complied with all requirements of SOX provisions.
Analysis regarding material weakness uncovered by the management and auditor
The auditor and management of Apple Inc. have not reported any material weakness in financial statements but there are chances that the entity can have internal control weakness regarding derivative instruments accounting and non-disclosure of forex exposure. In this case, the auditor and management could have uncovered such weakness by disclosing the lack of hedging instruments, but the entity has already taken the hedging instrument and all appropriate disclosures have already been made in the financial statements (Apple Inc, 2022). Further, the management has also provided a declaration regarding the efficiency of internal controls over financial reporting and process and the accountant has also performed all required procedures to check the accuracy and effectiveness of internal controls and has also disclosed the same in its audit report under the KAM paragraph.
Responsibility for identification, disclosure, and...
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here