Question

Founded in 1850. the American Express Company is a global travel financial and network services provider . Part A Find the most recent Annual Report for American Express at wwwamericanexpresscom and use the information found there to answer the following questions . 1. Read the Notes to the Financial Statements to determine the criteria for cash equivalents . 2. The internal control policy of American Express is described in the Report of Management . Summarize this policy 3. Which CPA firm conducts the external audit of American Express ? 4. Describe what internal audit is and some of the weaknesses American Express can face .

Answer 1

1. Cash and cash equivalents include cash and amounts due from banks, interest-bearing bank balances, including securities purchased under resale agreements, and other highly liquid investments with original maturities of 90 days or less.

2. Internal Control what it is?

The integration of the activities, plans, attitudes, policies, and efforts of the people of a department working together to provide reasonable assurance that the organization will achieve its objectives and mission

Internal Control Piolicy helps to effectively and effeciently run the operations of the business, systematic check is there so that prevention of fraud and other probhited activities is stopped.

* Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP), and includes those policies and procedures that

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Also audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

3. Price Water house coopers LLP

4. Internal Audit - Internal audits evaluate a company’s internal controls, including its corporate governance and accounting processes. These audits ensure compliance with laws and regulations and help to maintain accurate and timely financial reporting and data collection. Internal audits also provide management with the tools necessary to attain operational efficiency by identifying problems and correcting lapses before they are discovered in an external audit

Assessment Techniques

Analysis Techniques

Reporting Procedures

Some of The Weakness that american express can face -

1. INCOMPETENT STAFF: The limitation of internal audit is that audit staff may be incompetent. The purpose of internal audit fails to help the management. There may be lack of experience and training on the part of internal audit staff.
2. STAFF SHORTAGE:The limitation of Internal Audit staff shortage. There may be need of realistic audit staff to scrutinize the record, The shortage of staff is difficult to get the benefit of internal audit.
3. TIME LAG:The limitation of internal audit starts when there is the time lag between recording and checking entries. The accounting and internal audit must go side by side with a minimum time lag.
4. EXECUTIVE FUNCTION:The limitation of internal audit is that the internal auditor may be linked to executive function. In this case, he cannot examine the accounting books and other records. He cannot find out his own weaknesses.
5. ERRORS: The drawback of internal audit is that there may be errors in books of accounts. It depends upon the capability of internal audit staff. If audit staff is knowledgeable there is less chance of errors. In case of poor audit staff, there is no assurance that audited accounts are free of errors.
6. RESPONSIBILITY:The limitation of internal audit is that the management may not feel their responsibility in completing the audit formalities. The audit staff may give suggestions for the proper working of the business. The top-level management may not pay attention to suggestions. In this way, the audit work cannot help the business.
7. DUTIES:The limitation of internal audit is that there may not be proper division of duties. In this case, the internal auditor is unable to fix the responsibility for the negligence of duties. The management must be aware of the division of duties. The audit work can point out the weakness of business employees; otherwise, whole arrangement goes wasted.