The chairman of the board of Hughes Corporation proposed that the board hire as

Question

The chairman of the board of Hughes Corporation proposed that the board hire as controller a CPA who had been the manager of a team that conducted the Hughes Corporation audit engagement.  The chairman thought that hiring this person would make the annual audit unnecessary and would consequently result in saving the professional fee paid to the auditors.  The chairman proposed to give this new controller a full staff to conduct such investigations of accounting and operating data as necessary.

Evaluate this proposal.

Explanation / Answer

H corporation's chairman proposed that the board has hire a Certified Public Auditor tfor their audit engagement. The main aim the corporation is to ovoid unnecessary professional fee paid to the outside auditors. Chairman plans to give this new controller a full staf to conduct such investigations of accounting and operational data sources.The chairman thought that by hiring a CPA would make the annual audit unnecessary and consequently saving the professional fee paid to the auditors. In this case the new controller acts as a auditor.He controlles the corporations internal control activities. If good internal control system is in the corporation, then it leads to good and faith financial growth of the corporation.

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