Internal_Control_Lecture part 4.docx - Information...

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From COSO Information and Communication regarding Internal Control 1. The organization obtains or generates and uses relevant, quality information to support the functioning of internal control. 2. The organization internally communicates information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control. 3. The organization communicates with external parties regarding matters affecting the functioning of internal control. Information is ACCURATE and TIMELY What strengths and weaknesses regarding information and communication can you identify in the case below? Window Washers, Inc. has made a successful business out of washing windows in residential neighborhoods over the past five years. Employees of Window Washers receive a call the night before their job, and go complete the job the next day with no managerial supervision. Employees complete the job and report the following to their manager: hours to complete, area of windows washed, number of employees on the job, transportation time, ancillary expenses. Employees can choose to send the information in the form of a text, email, or leave a message on their manager’s phone. Information is due to the manager within three weeks of completing the job. Communication: Effective communication also must occur in a broader sense, flowing down, across and up the organization All personnel: 1. Must receive a clear message from top management that control responsibilities must be taken seriously. 2. Must understand their own role in the internal control system, as well as how individual activities relate to the work of others 3. Must have a means of communicating significant information upstream. 4. There also needs to be effective communication with external parties, such as customers, suppliers, regulators and shareholders. When communicating information – WHO is the intended recipient? Does this change the nature of the communication? Information & Communication
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Wells Fargo Scandal (Communication was flowing throughout the organization – but for all the WRONG reasons) Former Employees Detail Wells Fargo’s “Boiler Room” Operation by David Z. Morris Young salespeople were expected to meet goals by any means necessary. On Friday’s episode of NPR’s Planet Money, former Wells Fargo employees offered details of young salespeople being subjected to intense pressure to sign customers up for multiple accounts, ultimately leading them to engage in fraud. The report also undermines CEO John Stumpf’s claims, including those made before congressional committees, that leadership was unaware of that fraud. A former salesperson identified only as “Ashley” recounts some familiar parts of the story, including the bank’s steep sales goals. For much of her tenure, salespeople were expected to create eight new accounts per day—though sometimes the quota was as high as 20. When she didn’t meet her quotas,
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