preview

Audit Case

Better Essays
Open Document

internal control over financial reporting c a S eS inc lu de d in t hiS Se ction

5
155 155 165 169 177 185 195

5.1 Simply Steam, Co. 5.2 Easy Clean, Co.

. . . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation of Internal Control Environment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation of Internal Control Environment
. . . . . . . . . . . . . . . . . . . . . . . .

5.3 Red Bluff Inn & Café 5.4 St. James Clothiers

Establishing Effective Internal Control in a Small Business
. . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation of Manual and IT-Based Sales Accounting System Risks
. . . . . . . . . . . . . . . . . . . . .

5.5 Collins Harp Enterprises 5.6 Sarbox Scooter, …show more content…

Glover, Ph.D. and Douglas F. Prawitt, Ph.D. of Brigham Young University, as a basis for class discussion. Simply Steam is a fictitious company. All characters and names represented are fictitious; any similarity to existing companies or persons is purely coincidental.

copyright © 2009 by Pearson education, inc., upper saddle river, nJ 07458

155

section 5: internal control over financial reporting to practice making difficult judgments and to critically evaluate the issues surrounding professional judgment. The exercise involves the evaluation of the control environment (CE). Prior to SarbanesOxley and PCAOB Auditing Standard No. 2 (superseded by Auditing Standard No. 5), the evaluation of CE rarely received the attention it deserved in the professional literature and auditor training. However, a proper understanding of CE is one of the most important aspects of the audit. Lack of attention to CE is a potential contributor to several known alleged audit failures. Increased sensitivity to the CE may improve students’ ability to recognize those conditions in which the risks of fraud and material misstatements are high. The EC/SS exercise is intended to demonstrate some of the difficulties that auditors, as well as students, can have in using professional judgment when evaluating the oral assertions of management. The primary function of the exercise is to encourage students to engage in critical thinking about audit judgment and to begin developing a sense

Get Access
Related
Get Access