Description
You have a scheduled audit status meeting with your Audit Director. As you prepare for this meeting, please incorporate the key points in response to the questions below into your status report presentation.
1. What was the primary objective of your audit?
2. What are the key controls established to mitigate the inherent risks in the following processes: • Storeroom – Requisitioning, Ordering, Receiving, Picking, Physical Security • Accounting • Purchasing/Pricing • System Access • Key Metrics / Monitoring
3. What are the identified control deficiencies in the processes noted above?
4. What process changes would you recommend to improve the inventory controls and who should be responsible for implementing the corrective actions?
5. What additional information or testing, if any, would you want to obtain or perform, respectively, to determine the root causes for the variance?
6. Based on the initial results of your review, do you believe that the inventory variances are the result of poor control techniques or the result of fraud? If fraud is suspected, who is most likely to have committed the fraud and how was the fraud potentially perpetrated?
7. What recommended actions should be taken to reduce the risk of fraud within the storeroom process? What entity-level controls should be considered to reduce the risk of fraud?
8. What are the recommended next steps to complete your audit and communicate the results?
Explanation & Answer
Attached.
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Running head: SEASIDE CASE STUDY
Seaside Case Study
Institution Affiliation
Date
SEASIDE CASE STUDY
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1. What was the primary objective of your audit?
The primary objective of the audit was to provide reasonable assurance to the accounting
manager about whether the financial statements in the storeroom are free from material
misstatement either due to error or fraud in the storeroom. This is in regards to inventory concerns
about the reduction in inventory and the supply expense which according to the hospital
department had exceeded the budgeted amount. As an internal auditor, I was to investigate all the
financial statements and books of inventory to establish whether the concerns of the Accounting
manager had a base.
2. What are the key controls established to mitigate the inherent risks in the following processes:
Storeroom – Requisitioning, Ordering, Receiving, Picking, Physical Security, Accounting,
Purchasing/Pricing, System Access, Key Metrics / Monitoring
According to Michael Barton, the storeroom management has established various control
measures to mitigate inherent risks in the storeroom processes. To control the chances of errors
and omission, the storeroom management has established that supplies to be received through the
loading dock and further provides that those receivers be available during the day shift and the
night shift. Access to the storeroom is made through a single do...
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