From Sparks to Fired Essay

1025 Words Apr 14th, 2015 5 Pages
Hilario, Kedron
ACTG 6310
Dr. Harrington
4 February 2015
From Sparks to Fired: Case Study
1. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Enterprise Risk Management (ERM) – Integrated Framework (2004) is a guideline for managing risk and understanding internal controls. The eight components of the COSO ERM Framework are as followed: internal environment, objective setting, event identification, risk assessment, control activities, information and communication, and lastly, monitoring. Here we define/describe these eight components:
a. The Internal Environment captures the tone of the organization and the sets the standard on how risk is viewed and addressed by the entity’s members. The entity will define
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2. Internal Control Weaknesses and recommendations
COSO ERM Component Internal Control Weakness Recommendation
Internal Environment Lack of Standard Code of Ethics for all Employees Integrity starts with top management, and the more management supports and communicates the importance of ethical behavior, the more likely employees will internalize it as part of company culture. Management should establish and communicate a company-wide code of ethics (rather than a code for executives that just complies with Section 406 of SOX).
Risk Response Lack of discipline for fraud perpetrators Along with the Standard Code of Ethics, there should be an outline for disciplinary action for certain offenses. Currently, the company cannot discipline those who “did it to make the client happy” because they do not have a consequence/offense outlined to specifically punish them. Two people were fired because of unethical decisions; however, the company cannot define if the others were acting in good faith. Disciplinary procedures (write ups, conversation confirmers, warnings, and termination) will help prevent fraudulent behaviors from occurring.
Internal Environment Effective internal audit department Ensure that the proper procedures are in place and the appropriate authorities are authorizing these procedures. Adequate documents and records must be scanned to a shared drive or accounting system, so internal…