Question

In: Accounting

Please write in your own words and phrases. Tìm Johnson, CPA, is the senior in-charge on...

Please write in your own words and phrases.

Tìm Johnson, CPA, is the senior in-charge on an audit of a medium sized ($20M in assets) client, Dalton Enterprises, Inc. This client is a family owned and operated corporation. Mr. William Dalton (67 years old) is the president who micro-manages all aspects of the business except the finance area, which he leaves entirely to his son, Chauncy, who has been newly appointed as the VP of Finance. Chauncy, recently graduated with an MBA, and majoring in finance, is responsible for administering all the financial and accounting aspects of the business including the appointment of the auditors. Chauncy replaced Herb Castle who retired after thirty years with the organization. George Smerlas as controller reports directly to Chauncy. The audit report has never circulated outside the organization. The report provides a basis for the tax return which George prepares. It also provides Mr. Dalton with supplemental schedules including comparative aging schedules and a detail comparative listing along with the changes in all of the general ledger accounts. Mr. Dalton used the audit report, along with the management letter, for administrative control purposes. While analyzing the travel and entertainment expenditures, which were substantially ($20,000) higher than last year's amount, Tim noted that most of the increase was attributable to payments made on Chauncy's behalf. The supporting documentation for these expenditures were very sketchy and, in most cases, the only documentation was a check request initiated by Chauncy. All other T&E expenditures, including the modest payments on Mr. Dalton's behalf, were properly documented. When queried about this documentation problem, George acknowledged that the company's policy of having the immediate supervisor of the person requesting payment for T&E approve the voucher were circumvented here. But considering the circumstances, George was not concerned about the problem. When asked about the $25,000 travel advance due from Chauncy, George replied, "He signed your confirmation request acknowledging the amount due, didn't he?" Tim decided to discuss the problem of lack of approvals and documentation with Chauncy. Chauncy's response was to questions why the auditors would be skeptical of his honesty and motives here. He also stated that it was typical of "bean counters" to pursue areas that are of little significance, while ignoring areas where efficiency could be improved. He ended the interview by asking, "What are we paying you guys for anyhow?" All other audit areas and financial statement disclosures are deemed satisfactory.

What are the issues of internal control faced by the given firm? Suggest preventive and corrective measures to rectify the problem.

Solutions

Expert Solution

AS YOU MENTIONED  write in your own words and phrases WE TRIED TO WRITE THE ANSWERE IN OUR WORDS SO PLEASE----PLEASE KINDLY UP VOTE IT HELPS ME A LOT THANK YOU IN ADVANCE


Related Solutions

please use your own words and phrases what are the importance of audit planning ?
please use your own words and phrases what are the importance of audit planning ?
in 300 hundred words or more, please write, in your own words, about one of the...
in 300 hundred words or more, please write, in your own words, about one of the entities that establish the rules accountants must follow when preparing financial reports. they include, but are not limited to, the Financial Accounting Standards Board (FASB), International Accounting Standards Board (IASB), and the Security Exchange Commission (SEC). please also state your opinion wether the mission of the organization you are writing on helps to provide guidance to aacountants or is repetitive of other standard-making bodies....
Solve the below questions using your own words PLEASE!! Make sure to write by your own...
Solve the below questions using your own words PLEASE!! Make sure to write by your own words or paraphrase 1. What is the difference between Windows and Linux server 2. Give some advantages and disadvantages Windows and Linux Operating System
you can discuss ""religion and society "in your own words? please write whatever, using your own...
you can discuss ""religion and society "in your own words? please write whatever, using your own idea, any idea of ​​yours will be correct! 1 page
Please write an essay using your own words about the following prompt (500 words): In an...
Please write an essay using your own words about the following prompt (500 words): In an evolution vs. creationism debate, you have been asked to be the expert witness for the scientific perspective that states that evolution of life on Earth is a fact, and is central to understanding modern biology. Detail your presentation, be sure to address at least 5 major points creationists will put forth to try and say that evolution is “just a theory”.
You work for a well-known regional CPA firm and are the senior auditor in charge of...
You work for a well-known regional CPA firm and are the senior auditor in charge of the fieldwork for a medium sized manufacturing company in the Chicago metro area. The company has been a client for over ten years and there have never been any concerns with the company's systems of controls or their accounting practices. Accordingly, RMM has been considered to be low and audits have been able to place reliance on tests of controls. The interim fieldwork included...
Please Write Handwritten on the page On your own words, explain the purpose and the importance...
Please Write Handwritten on the page On your own words, explain the purpose and the importance of the income statement, and prepare the income statement for ABC company based on the following information taken from the trial balance in 2019 Consulting revenue SAR70,000 Rental revenue 30,000 Supplies expense 5,000 Rent expense 20,000 Wages expense 30,000
Write a summary of this paragraph, Please in your own words. Trespass to Land A trespass...
Write a summary of this paragraph, Please in your own words. Trespass to Land A trespass to land occurs when a person, without permission, does any of the following: Enters onto, above, or below the surface of land that is owned by another. Causes anything to enter onto land owned by another. Remains on land owned by another or permits anything to remain on it. Actual harm to the land is not an essential element of this tort, because the...
PLEASE NO PLAGIARISM AND MUST BE IN YOUR OWN WORDS You must write a minimum of...
PLEASE NO PLAGIARISM AND MUST BE IN YOUR OWN WORDS You must write a minimum of two paragraphs and every paragraph should have at least four complete sentences. What is risk management? What is Vulnerability assessment? Thanks!!
PLEASE NO PLAGIARISM AND MUST BE IN YOUR OWN WORDS You must write a minimum of...
PLEASE NO PLAGIARISM AND MUST BE IN YOUR OWN WORDS You must write a minimum of two paragraphs and every paragraph should have at least four complete sentences. What is the difference between security and safety? What is the relationship between risk management and vulnerability assessment? Thank!!
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT