Unit 5 Assignment 2 - Running Head Unit 5 Assignment 2 1...

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Running Head: Unit 5 Assignment 2 1 Unit 5 Assignment 2 Ryan Tackett September 7, 2015 Ac 410 Professor Beiser
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Unit 5 Assignment 2 2 A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting, that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the company's financial reporting. A deficiency in design exists when (a) a control necessary to meet the control objective is missing or (b) an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met (PCAOB, 2015). With that definition in mind one can look at the company’s lack of revenue recognition processes as a deficiency in design. Per US GAAP revenue should be recorded at the date of earning not when payment is actually received. The same works in reverse. The company’s policy of not recording a refund when a package is cancelled would definitely cause discrepancies on the financial statements. Based
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