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that showed some material weakness or significant deficiency. That finding was (Messier et ed., 2017):EarthWear Clothiers has on manufacturer and one intermediary that accounts for fourteenand twenty-nine percent of the company’s received merchandise and over eighty percent of the company’s merchandise is imported from other countries. EarthWear Clothiers’ has several manufactures in foreign countries. EarthWear Clothiers is taking advantage of worldwide sourcing but may run into the risk of finding alternative sourcing if the main manufacturer or intermediary can no longer supply the merchandise. Also, costs for merchandise from the manufactures or intermediaries may vary due to the cost stated in trade policies. EarthWear Clothiers needs to make sure they are periodically reviewing the cost of their merchandise and review contracts to make any changes as needed (Messier et ed., 2017). Willis & Adams did not note any gaps in internal controls related to risk assessment.Information SystemEarthWear Clothiers’ information system is necessary for EarthWear Clothiers to be able to carry out internal control responsibilities in support of achieving its objectives. Information system needs to demonstrate the following principles in order to be effective (Messier et ed., 2017):EarthWear Clothiers obtains or generates and uses relevant, quality information to support the functioning of other components of internal control.
EarthWear Clothiers internally communicates information including objectives and responsibilities.EarthWear Clothiers communicates with external parties regarding matters affecting the functioning of other components of internal control.EarthWear has detailed job descriptions that include specific duties that are clearly established and communicated to employees. Willis & Adams recommends for Human Resources to meet with the management of departments annually to review the job descriptions for each employee and make any changes as necessary. Employees need to be given a description of their job annually, after Human Resources and management meet, for them to be aware of any changes and to sign off on. Along with reviewing job descriptions, Willis & Adams recommends for management to perform, minimally, annual review for their employees along with having their employees change passwords quarterly to have safeguards in place to protect EarthWear Clothiers’ from theft (Messier et ed., 2017). EarthWear Clothiers senior management needs to maintain a level of communication withemployees of what is expected every month and develop a month end close checklist so the accounting period cannot be closed until every record is posted accurately. Along with letting employees know what is expected every month, management needs to make sure policies, manuals, etc. are communicated to employees when changes have occurred and that this information is readily available if an employee needs to reference them.