Consider the following example earthwear clothiers is

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Unformatted text preview: , and the effectiveness of an entity’s internal control. Consider the following example: EarthWear Clothiers is a successful mail-order retailer of high-quality clothing for outdoor sports. Over the last few years the company has expanded sales through its Internet site. EarthWear’s common stock is listed and traded on NASDAQ. Securities laws require company officials to certify that they have properly designed, implemented, and tested internal control over their accounting and reporting information systems. EarthWear’s public accounting firm, Willis & Adams, examines on a yearly basis the design and documentation of EarthWear’s internal control and conducts independent tests to verify that EarthWear’s system is operating effectively. Willis & Adams issues a report to the public expressing its opinion on management’s assertion that EarthWear’s internal control is well designed and operating effectively. Thus, stockholders, creditors, and other stakeholders can have greater confidence in the financial reports issued by EarthWear’s management. Most readers of an introductory...
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This note was uploaded on 12/08/2012 for the course ACCT 564 at Washington University in St. Louis.

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