Auditingcase4disqu - areas of the companies to ensure...

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Discussion Questions 1) In order to properly answer Cline’s questions regarding the status of Lakeside’s internal controls Andrews and Heyman should meet with the auditors who previously did the audit and inquire as to what they used as a proper control risk, and if they are aware of any internal control issues. Perhaps the greatest asset to Andrews and Heyman would be the information found in the permanent file. The way Lakeside’s internal controls were set up, they often make copies of documents and place them into the permanent file. Looking at the permanent file would be the greatest indicator is there are any problems or variation in similar documents in the file. 2) Lakeside has provided a good environment for strong internal controls. It enforced that each step in the ordering process goes through many people in different
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Unformatted text preview: areas of the companies, to ensure proper use of checks and balances. The company does not however have a great method of analysis and recognition of wheatear of its risk assessment. Throughout the entire process approval and stamps of approval are needed in order for the order to be further processed. The internal controls are properly segregated as well, including the sales division, inventory division, accounts receivable/credit recognition, controllers, and assistant and/or presidential approval. The main issue we have regarding the companies information and computer systems is that they use a third party computer center in order to keep track of their perpetual inventory. This could provide an issue and now part of the internal record keeping and control process is outsourced to an external company....
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