Question

Campus Fast is a new audit client. Client Fast uses public WiFi to place and deliver restaurant take out for students at the Up and Coming State University. Campus Fast was founded by three highly ambitious MBA students at the university. The business plan is to find a buyer or place an IPO of the company by graduation in two years. The founders expect to pay off all student loans, take a tour around the world and then start another company. In order for the business plan to work on the timeline for graduation, the business must meet highly ambitious earnings numbers. Additionally, the company is dealing with two situations that the founders would like to keep from the auditors:

1) The company has been using free, unsecured public WiFi to take orders via the Internet. The customer may pay via the Internet. Several students, who all happen to be members of the same student organization on campus, are claiming that using Campus Fast has allowed their identity to be stolen. One student is claiming that she had $12,000 of charges on her credit card to the unsecured Internet site of Campus Fast. Management plans to pay off the complaining students and keep the true liability off the balance sheet. The reason is Campus Fast is concerned that an interested buyer may become concerned about the unsecured site and might get scared by the student complaints.

2) The company guarantees fast delivery. It has offered to pay any speeding or other moving violation tickets to its delivery drivers. Unfortunately, one of the drivers was involved in an accident due to running a red light. The passenger in the other car is in critical condition and the intensive care unit in the hospital. The driver has promised the family of the passenger that the company will make good on any expenses and admitted the company policy on repaying all traffic tickets. Attorneys for the injured party are threatening to sue and publicize the situation. The founders do not have enough cash to take care of this problem but are still trying to keep the situation from the auditors and potential buyer.

Using the internal control framework assess the internal controls at Campus Fast and risk environment.

Answer 1

Answer:

Influenced by OSU, internal control system is a procedure intended to give Assurance in the accomplishment of categorisation of an association's internal controls. It assists association with accomplishing its goals. It is a structure that contains strategies to make business value and to minimize risk.

Internal controls are powerful and the lessen risk of asset misfortune and wellbeing in setting up obligations , keep up records and configuration designs that are precise in data and which are dependable and guarantee that all laws are followed in the organisation.

It has 7 internal control techniques:

• Separation of responsibilities
• Evaluate controls
• Physical audits
• Normalized documentation
• Trail balances
• Preiodic reconciliation
• Endorsement authority

The grounds quick as per the internal control Framework should utilize the remedial internal controls that is utilized after the mistakes are made to find a way to correct them and afterward to keep them from happening later on. The Detective control is utilized to identify the mistakes and afterward the character of internal control is utilized to correct them. The grounds quick has just made those mistakes so you should attempt to correct them and maintain a strategic distance from them so as to accentuate quality in its work.

It would assist grounds with fasting in guaranteeing fiscal reports of it and empowering consistence and building trust among its potential purchasers and auditors.