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Case 09 9 Essay

1620 words - 7 pages



1. Biltrite’s strengths and weaknesses in the internal control Assertion

Sale Processing Flowchart:

A. The office was uninformed about the credit approval - Valuation
B. Missing customer information and product validation - Valuation
C. Invoices were mailed before shipping the goods - Existence
And does not matched with bill of lading
D. Bill of ladings are not pre numbered - Completeness

Good internal control for receivables aging analysis and Follow up of delinquent accounts.

Cash Receipts Processing Flowchart:


E. Unrestricted customer check endorsement ...view middle of the document...

* Provides good training program to employees to lessen errors.
* The CEO, Trevor Lawton lacking independency since he was also the chair of the board.
* The chairman and controller has developed and improved internal control over financial reporting.
* Biltrite developed a code of conduct and addressed in the company’s newsletters
* The audit committee is made up of exclusively external members

The auditor may raise the following questions or need to inquire management and get appropriate information and support.

1. For integrity and ethical values- Does the management develop, understood and set the standard of conduct for financial reporting with integrity and ethical values?

2. For the Board of Directors- Has the board of directors understands and exercises oversight responsibility related to financial reporting and related internal control?

3. Does the board of director’s independent member and actively evaluates and monitor risk of management and considers risks affecting reliability of financial reporting?

4. For Audit Committee- does the audit have knowledge or expertise in financial reporting and actively monitor the effectiveness of internal control over financial reporting and preparation?

5. For Organizational Structure- Does the company’s organizational structure supports effective internal control over financial reporting?

6. For Financial Reporting Competencies- Does the company retains individuals competent in financial reporting and related oversight roles.?

7. For Authority and Responsibility- Does management and employees are assigned appropriate levels of authority and responsibility to facilitate effective internal control over financial reporting?

8. For Human Resources- Does Human resource policies and practices are designed and implemented to facilitate effective internal control over financial reporting?

9. For Management’s Philosophy and Operating Style- Management’s philosophy and operating style support achieving effective internal control over financial reporting?

Biltrite’s Strengths and weaknesses related to the Risk Assessment of COSO principles

* The controller is taking quality approach to risk management in regards to financial reporting and information system.

* The CEO/BOD took initial steps to develop an enterprise risk management initiative but there’s not much progress in this field.

* Lack of importance that the CEO/BOD places on financial reporting.

The auditor may raise the following questions or need to inquire management and get appropriate information and support.

1. For Financial Reporting Objectives- Does management specifies financial reporting objectives with sufficient clarity and criteria to enable the identification of risks to reliable financial reporting?

2. For Financial Reporting Risks- Does the company identifies and analyzes risks to the achievement of financial reporting...

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