You have discussed with the president of Vista Corporation several material weak

Question

You have discussed with the president of Vista Corporation several material weaknesses in internal control that have come to your attention during your audit. At the conclusion of this discussion, the president states that he will personally take steps to remedy these problems and that there is no reason for you to bring these matters to the attention of the board of directors. He explains that he believes the board should deal with major policy decisions and not be burdened with day-to-day management problems. How would you respond to this suggestion? Explain fully and provide supporting document. Please list any source used.

I saw there was an anwser listed for this already in Chegg, however, the answer appeared to be vague and lacked supporitng detail.

Explanation / Answer

Ans: When the president asked the auditor not to report the weaknesses in the internal control, he / she is asking the auditor to break teh rules of the GAAS( generaaly accepted accounting standards).

As an auditor, it would be my job to report these insufficient area in orfer to warn about the weakness in internal control.Even if the president has promised to bring the subject and resolve through their own steps , it would be a huge violation of GAAS . Internal controls are essential to teh success of a company and these issues should be reportde immediately.

Inernal controls has 5 components to be taken care of seriously, they are :

1. The control environment

2. Risk assessment

3. Control activities

4. Accounting information and communication system

5. Monitering

Commuication and enforcement of the integrity and ethical vaues of the personnel who are responsible for creating , administering and monitoring controls.Commitment to Competence:Managment should be commitment to hiring employees with appropraite levels of education and experience.

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.