AccuBrake Inc., a manufacturer of lifts for auto service shops, purchases its supplies both domestically and...

 

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AccuBrake Inc., a manufacturer of lifts for auto service shops, purchases its supplies both domestically and internationally. Robert Hwang, the chief audit executive, was preparing for year-end meetings with the Board of Directors and senior management. He had recently become aware of a conflict of interest between the purchasing manager of the company and the company's largest domestic supplier where it appeared that the company had materially overpaid for some of its supplies. He planned to report this conflict to the Board. He found no issues in the review of the international suppliers, but he did identify an issue with the warehouse. He found that the finished inventory in the warehouse was not appropriately safeguarded. As part of the year-end meeting, Hwang planned to request that the Chairman of the Board sign off on the appropriateness of the financial statements to be compliant with the Sarbanes-Oxley Act. *Source: Retired ICMA CMA Exam Questions. Required: A. Identify and describe two types of internal control failures and related risks that internal auditors should report to management or to the Board of Directors. B. Should the chief audit executive report the conflict of interest to the Board of Directors? Explain your answer. C. Identify and explain four responsibilities of the Board of Directors' with respect to ensuring that the company is operated in the best interest of shareholders. D. Describe three activities relating to auditors prohibited under Section 201 of the Sarbanes-Oxley Act Section 201 relating to auditors' activities. E. Will the company be compliant with the Sarbanes-Oxley Act Section 302, if the Chairman signs off on the appropriateness of the financial statements? Explain your answer. F. Identify and describe the major internal control provisions of the Foreign Corrupt Practices Act (FCPA). G. Identify one change that the management of AccuBrake should implement to be compliant with the FCPA. AccuBrake Inc., a manufacturer of lifts for auto service shops, purchases its supplies both domestically and internationally. Robert Hwang, the chief audit executive, was preparing for year-end meetings with the Board of Directors and senior management. He had recently become aware of a conflict of interest between the purchasing manager of the company and the company's largest domestic supplier where it appeared that the company had materially overpaid for some of its supplies. He planned to report this conflict to the Board. He found no issues in the review of the international suppliers, but he did identify an issue with the warehouse. He found that the finished inventory in the warehouse was not appropriately safeguarded. As part of the year-end meeting, Hwang planned to request that the Chairman of the Board sign off on the appropriateness of the financial statements to be compliant with the Sarbanes-Oxley Act. *Source: Retired ICMA CMA Exam Questions. Required: A. Identify and describe two types of internal control failures and related risks that internal auditors should report to management or to the Board of Directors. B. Should the chief audit executive report the conflict of interest to the Board of Directors? Explain your answer. C. Identify and explain four responsibilities of the Board of Directors' with respect to ensuring that the company is operated in the best interest of shareholders. D. Describe three activities relating to auditors prohibited under Section 201 of the Sarbanes-Oxley Act Section 201 relating to auditors' activities. E. Will the company be compliant with the Sarbanes-Oxley Act Section 302, if the Chairman signs off on the appropriateness of the financial statements? Explain your answer. F. Identify and describe the major internal control provisions of the Foreign Corrupt Practices Act (FCPA). G. Identify one change that the management of AccuBrake should implement to be compliant with the FCPA.

Answer rating: 100% (QA)

1 Reporting should include significant risk exposures and control issues corporate governance issues and other matters needed or requested by the Board and senior management The report should highligh... View the full answer