Using the narrative of the business processes or transaction cycles that are relevant to an entitys financial reporting; identify the risk of material misstatement that may occur in the transaction cycle and what control can be put in place with respect to such risk identified.

Financing This cycle includes issuance and repurchase of debt (bank loans, mortgages, bonds payable) and capital stock, and payment interest and dividends. Debt and capital stock transactions should be authorized by the board of directors. Often an independent trustee issues bonds, monitors company compliance with the provisions of the debt agreement, and pays interest. For capital stock transactions, corporations may either employ an independent stock registrar and a stock transfer agent, or handle their own transactions. Normally, internal control is stronger when a stock registrar and a stock transfer agent are utilized. A stock registrar's primary responsibility is to verify that stock is issued in accordance with the authorization of the board of directors and the articles of incorporation; the stock transfer agent's primary responsibility is maintaining detailed stockholder records and carrying out transfers of stock ownership. What Can Go Wrong (Risk) Control Procedure Financing This cycle includes issuance and repurchase of debt (bank loans, mortgages, bonds payable) and capital stock, and payment interest and dividends. Debt and capital stock transactions should be authorized by the board of directors. Often an independent trustee issues bonds, monitors company compliance with the provisions of the debt agreement, and pays interest. For capital stock transactions, corporations may either employ an independent stock registrar and a stock transfer agent, or handle their own transactions. Normally, internal control is stronger when a stock registrar and a stock transfer agent are utilized. A stock registrar's primary responsibility is to verify that stock is issued in accordance with the authorization of the board of directors and the articles of incorporation; the stock transfer agent's primary responsibility is maintaining detailed stockholder records and carrying out transfers of stock ownership. What Can Go Wrong (Risk) Control Procedure