Case Study 2 Acct504 (Learning Objectives 2, 4: Explain the components of internal control; evaluate internal controls)

| November 9, 2018

Case
Study 2
Due by Sunday of Week 5, 11:59
p.m., Mountain time

(Learning Objectives 2, 4: Explain
the components of internal control; evaluate internal controls) Each of the
following situations reveals an internal control weakness:
Situation
a. In evaluating the internal control
over inventory for the Williams Oil Services Company, an auditor learns that
the warehouse receiving clerk is responsible for ordering parts for supply inventory use in drilling services,
counts the inventory when received at the dock, records the receipts into the
inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk’s work.
Situation
b. Nicole Lopez handles employee
travel and expense reports for Scott Sales Services. With the growth in the
economy, the sales team began traveling extensively gaining new business. Because of the heavy volume, she no longer
required the sales team to provide original airline, hotel, or car rental
receipts. She told them to just keep
their meals under the $100 per day per diem and no receipts were required. She
allowed them to use their own credit cards so they could get the frequent flyer
points. She required them to turn in a summary of the travel expenses
quarterly.
Situation
c. Michael Jordon is a new employee hired
from Craig’s List recommended by a co-worker.
Mike was hired as a Human Resource Assistant. Mike’s first day on the
job he is told that he should follow his own judgments when deciding how
employee issues such as hiring and firing of employees, sexual harassment, and
ethical infractions should be handled.
Top of Form


Requirements

1. Identify the missing internal control characteristic
in each situation.
2. Identify each firm’s possible problem.
3. Propose a solution to the problem.

Bottom of Form

Category

Points

Description

Understanding

10

Demonstrate
a strong grasp of the problem at hand. Demonstrate understanding of how the
course concepts apply to the problem.

Analysis

30

Apply
original thought to solving the business problem. Apply concepts from the
course material correctly toward solving the business problem.

Execution

10

Write your answer clearly and succinctly using
strong organization and proper grammar. Use citations correctly.

Total

50

A
quality paper will meet or exceed all of the above requirements.

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