Question

Aftron is a very famous US company producing auto spare parts. They produce parts on large scale
and sells all over the country. Most of the US car manufacturing industries place orders with them
in advance for the various auto parts. For these advance bookings, companies make payments for
the pre booking of delivery of parts. Aftron are known for their efficiency and reliability among
the business communities. One-day news breaks out for the default of Aftron. The news turned
out as a shock for the auto industries. There seems to be multiple reasons for the default. In such
a situation it is hard to blame someone for the failure. Investors are assuming that the financial
statements fail to present the performance of the company. The disclosures are insufficient in
highlighting the key assumptions and judgements made when estimating the fair value of assets.
The management of the company blames the financial team and internal control system. The
financial team are unable to provide realistic calculations to the management and does not follow
the correct practices.

a. In your opinion, what information could be presented by the company to cover up their flaws?
Being an internal control officer, what strategy you would follow to investigate the internally
generated failures?

b. What suggestions would you like to provide to the management to make themselves aware of
the company’s activities in order to save the Aftron from such happenings in the future.

Answer 1