Management Control

1707 WordsMay 8, 20137 Pages
Case 2 Case 2 is divided into two independent parts. You have to complete both parts.   Part 1: Case “Spice is right” (Hall, Chapter 4, Internal control case) (max 1-2 pages) Only point c (COSO), not a, b, and d. Part 2: Case “Vouch and Trace” (max 2-3 pages) Vouch and Trace You are a new accounting graduate and this is your first week on the job at the Los Angeles office of a CPA firm. You are still adapting to Los Angeles and to your new job in this fast-paced and exciting environment. Here you are, plucked from a small city located among farmland in the Midwest, adjusting to the big-city lifestyle. You earn more than you ever imagined and you live in an overpriced, tiny apartment. Last night, you couldn’t fall asleep because of the…show more content…
For instance, if you select a sample of ten entries from the sales journal, you might vouch from the sales journal to the related invoice, shipping documents, and sales order. If you select a 2 sample of ten sales orders, you might trace the sales orders to the related shipping documents and invoices and finally into the sales journal. Or you might select your sample from the shipping documents or the invoices. Only one of these approaches is correct. You must determine which approach will provide evidence supporting the audit objective. Your goal is to obtain the most persuasive evidence that sales are not misstated. It should be helpful to know that the shipping document numbers are cross-referenced on the invoices and that the sales order numbers are cross-referenced on the shipping documents. The sales journal, sales orders, shipping documents, invoices and price list are online at References Association of Certified Fraud Examiners (ACFE). 2006. 2006 ACFE Report to the Nation on Occupational Fraud and Abuse. Available at: /2006-rttn.pdf. Beasley, M., J. Carcello, and D. Hermanson. 1999. Fraudulent Financial Reporting: 1987–1997 An Analysis of U.S. Public Companies. Washington, D.C.: Committee of Sponsoring Organizations of the Treadway Commission. Berenson, A. 2003. The Number: How the Drive for Quarterly
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