Essay Audit Engagement - 993 Words

Subject: Assessment of Exton Industries, Inc. Dear Ms. Johnson: nbsp;nbsp;nbsp;nbsp;nbsp;I have recently reviewed the Control Environment Questionnaire for Exton Industries, Inc. After evaluating the evidence collected by our staff member, I have come up with an assessment of the fraud risks. From the evidence gathered, I have concluded that Exton Industries has a weak control environment. Overall, it will not do an effective job of preventing fraudulent activities. nbsp;nbsp;nbsp;nbsp;nbsp;While evaluating Exton Industries, I had to consider how the control environment would prevent misstatements arising from misappropriation of assets and fraudulent financial reporting. nbsp;nbsp;nbsp;nbsp;nbsp;The controller,†¦show more content†¦The audit committee privately discusses relevant issues with external auditors and conducts annual reviews of audit functions and activities. However, there were three issues that could lead to misstatements arising from fraudulent financial reporting or misappropriation of assets. The first issue is the fact that the board is supposed to address management’s adherence to the code of conduct and it was noted that a code exists but the board does not take specific actions related to adherence. The second and third issues are that the board is supposed to issue directives to management detailing specific actions to be taken and oversee and follow up as needed. It was noted that neither one of these practices were observed. From the evidence gathered, it seems as though Exton Industries’ control environments for their organizational structure, integrity and ethical values and management’s philosophy and operating style are weak and may not prevent fraudulent activities. The new management team encourages managers to cut through red tape whenever possible, employees stated that in prior years communications channels were observed whereas now, they are more formal and less candid and the new management team has not completed their planned assessment of the organizationalShow MoreRelatedAudit Engagement Checklist11116 Words   |  45 PagesPrint Form 00-1 2009 General Audit Engagement Checklist 20,401 Section 20,400 General Audit Engagement Checklist Checklist for Review of Audit Engagements Contents Section I. The Auditor’s Report With Regard to the Auditor’s Report............................................................................................... II. General Audit Procedures With Regard to Client Acceptance .................................................................................................. 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The effective date of the new accounting standard for companies reporting under International Financial Reporting StandardsRead More10 key ratio1411 Words   |  6 Pagesand contrast global approaches to limiting accountants liability throug the use of engagement letter. rule 101 interpret thta indemnification agreements remove a major stimulus to objective and unbiased consideration of problem encountered in an egagement. regulator wants to retain the right to pursue recovery of losses against auditors of failed institutions safety and soundness. AICPA members providing audit or other attestation services for banking, insurance, and other regulated industries