Jack Greenberg, Inc. Essay

913 Words Nov 19th, 2010 4 Pages
Jack Greenberg, Inc.

1. Family owned business is a business that is owned by one family, most of the shareholders are from the same family. One of the major problems in this type of business is a conflict in interests among the family’s member. The auditor should be careful and observe the type of the relationship among the family’s member. There should be a written agreement to specify rights, duties, and obligations for each member, the auditor should read those documents for further information. One issue that faced the auditor is to understand the attitude of each member, the risk of manipulating facts can be existed due to the close relationship. In the case of Jack Greenberg, the son has manipulated the numbers in the record
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* Cutoff: Transactions are recorded in the proper period.

3. Internal evidence is created, used, and retained within the client’s organization and without the help of outside parties for example; sales invoices duplicate copy, employees’ time reports, inventory reports, and purchase requisitions. On the other hand, external evidence originates outside the client’s organization for example; bank statement. This type of documents generally prepared in the ordinary course of business activities and form part of its records whether of accounting or non-accounting nature. Sometimes obtained directly from source such as bank, debtors, and creditors confirmations. External evidence and the internally generated evidence circulated externally are more reliable than the internal evidence.

4. Walkthrough is simply the act of tracing a transaction through organizational records and procedures, a commonsense approach to learning how a process works. The purpose of walkthrough procedure is to evaluate the reliability of the client's accounting system. The auditor looks at the supporting documentation for a transaction from its starting point and then proceeds to examine the accounting system steps thereafter until ultimate disposition of the item. The walk-through examination is one of the tests that is important for the auditor to obtain an understanding of the client’s business. The U.S. Public Company

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