Audit Engagement Essay examples -- essays research papers

Subject Assessment of Exton Industries, Inc.Dear Ms. JohnsonI have recently inspectioned the find Environment Questionnaire for Exton Industries, Inc. After evaluating the evidence collected by our staff member, I have come up with an assessment of the fraud risks. From the evidence ga in that respectd, I have concluded that Exton Industries has a clean control environment. Overall, it provide not do an effective job of preventing fraudulent activities.While evaluating Exton Industries, I had to picture how the control environment would prevent misstatements arising from misappropriation of assets and fraudulent financial reporting. The controller, CFO, and chief executive officer review all financial reports before releasing them. Another theater of operations to consider was the assignment of authority and responsibility. Because three different people review the financial reports, its easier to identify any mistakes that whitethorn have been make which in turn reduces the c hances of misappropriation in fraudulent reporting. Through conference with employees it was noted that beseeming responsibility and delegation of authority were assigned and the victorian information appeared to be considered in developing responsibilities. Written job descriptions and standards excessively represent. Since proper responsibility and delegation of authority and written job descriptions and standards exist the, the chances of fraudulent activities are reduced.Other issues to consider were managements consignment to competence and gay resource policies and procedures. During the hiring process, management makes sure the potential employee possesses the proper knowledge and skills to carry out the job adequately. Upon hiring, the new employee is made alive(predicate) of his or her responsibilities and managements expectations of them. In addition supervisors conduct yearly reviews. The companys previous success also shows that employees have the required skill s and knowledge. Discussions with employees indicated that they are made aware of the consequences if they perform ineffectively and/or do not fulfill their responsibilities. Exton Industries has effective controls in their commitment to competence and human resource departments hiring and review process. Overall, the control environment of the senesce of directors and audit committee bequeath p... ...ast year several employees have leave on short notice and there has been difficulty in retaining keystone personnel. The new management team is probably worried astir(predicate) getting profits up and by using an aggressive approach there may be more errors because financial statements may not study as thoroughly. The cause of the high turnover rate should be investigated, employees may be leaving because others are committing fraudulent behavior and they do not want to get involved. Management may be encouraging this or may not see it because they are too worried about making the company look profitable. Lastly, there were wanderures to protect valuable assets, which could remove to misappropriation of assets. In conclusion, I found that Exton Industries has some internal controls that will prevent fraudulent financial reporting and misappropriation of assets however, they are absent effective internal controls as well. As a result of Exton Industries having weak internal controls, control risk is increased and the audit team will need to choose higher control risk strategies. If controls in the areas deficient are not improved the control environment will fail to protect future fraudulent acts.