Assignment task:
John Legend runs a very successful construction company with two divisions (roofing and heating). The company has a small, but competent accounting staff who process all transactions; they also have a full-time internal auditor. They do not have a Board of Directors to assist with governance or provide oversight. John prefers to reach out to his favorite professor of all time - his auditing professor. John manages the roofing division with a solid team of six people with well-defined roles and responsibilities. Management of the heating division has been delegated to Gwen Stefani.
In contrast to John's division, all aspects of the of heating division are handled by only 2 people - Gwen and her assistant Blake - including all bids for jobs (and approving any verbal bid changes), purchasing all materials (often without competitive bids), control over the physical inventory all of materials, supervision of projects, customer billing and collection of customer payments. John trusts Gwen implicitly and essentially lets her run her own show. John does not have a lot of expertise in the heating industry so he has almost exclusively relied on Gwen to build the business. The division typically performs very well so he has no reason to question Gwen's management ability. John and Gwen rarely meet to discuss industry changes or challenges the company is facing - or risks that might prevent them from achieving their objectives. John even agreed to Gwen's request to not have the internal auditor worry about her division, as she is far too busy to deal with interruptions from the internal auditor.
The accounting team often complains about information received from Gwen's division: missing documents, use of documents that are sequentially out of numeric order, lack of supporting documentation for journal entries. In addition, they don't like the fact that Gwen and Blake have full access to all aspects of the computerized AIS.
REQUIRED: List each component of the COSO framework and then identify 1 control weakness for each component, except for "Control Activities" (item 5) where you must list 2 control weaknesses (be specific about which of the 4 types of control activities you are referring to.) Use the table below to record your answer. Show less
List each component of the COSO framework and then identify 1 control weakness for each component, except for "Control Activities "where you must list 2 control weaknesses