Easy Clean 2006

3097 Words Feb 27th, 2013 13 Pages
Easy Clean, Co.:
Evaluation of Internal Control Environment[1]

LEARNING OBJECTIVES

Evaluate a new audit client 's control environment.

Provide an initial evaluation of certain components of the client 's control environment

Appreciate the judgment involved in evaluating the overall internal control environment based on interview data

Provide support for your internal control assessments

Ted is a manager in the Business Advisory and Assurance Services division of a national public accounting firm. He has been given the job of managing the audit of Easy Clean, Co., which provides industrial and domestic carpet steam-cleaning services. Easy Clean has never been audited. Thus, Ted does not have any prior-year
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Of course, these are almost always subject to approval by me or Mr. Day. Large industrial jobs are typically booked well in advance of the actual work. The job commitments obtained by the salespeople are normally submitted to Mr. Day, who signs them to indicate his approval and then returns them to the salespeople. Sales people then forward job commitments to one of two data input clerks for processing. The computer processes each commitment by extending the number of jobs by the standard price stored on the pricing file, or in specially negotiated situations, by the price on the input document. The sales, accounts receivable, and commitment files are updated and invoices are produced. An exception report of special prices is produced and sent to the salespeople to ensure that the specially negotiated commitments to jobs were processed correctly. Mr. Day developed this sales system himself and it 's working rather well. He 's currently in the process of creating the user manual for the system. I 've also noticed that he sometimes makes adjustments to improve the system, which makes the accounting process more efficient. We 've agreed that he 'll reevaluate the process at least once every eight weeks.
Ted: And how about your accounting department? How big is it, and who oversees the accounting process?
Doug: The accounting department of Easy Clean consists of seven part-time clerks, including the two data input

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