From: The Alchemy Incorporation. External Review Team
Particular date: September twenty three, 2008
Re: Internal Control Weaknesses Keep Alchemy Incorporation. Vulnerable to Mistakes, Fraud, and Abuse
Inner controls represent an organization's processes and procedures utilized to meet the goals and objectives and serve as a defense in safeguarding resources and avoiding and finding errors, fraud, and abuse. Effective interior controls provide reasonable assurance that an company objectives are achieved through (1) dependable financial credit reporting, (2) conformity with laws and regulations, and (3) effective and efficient functions. The transferring of the Sarbanes-Oxley Act of 2002, and also the numerous corporate and business frauds and bankruptcies within the last decadeвЂ”including some from Good fortune 500 companies such as Enron, WorldCom, and TycoвЂ”reinforced the need for a strong system of internal controls, and substantially increased the awareness of management, investors, the Congress, and the public of the need for a strong system of internal regulates. Further, with no effective inner controls, administration, as well as traders, have small assurance that fraudulent, incorrect, and abusive actions are being prevented or, in the event that occurring, are being quickly detected with appropriate further actions used.
Assessing the internal control environment, as well as the style of the controls themselves, remains an integral help our auditing process. Without taking the time to know and examine a company's controls, not simply would the firm certainly not be in conformity with generally accepted auditing standards and the Sarbanes-Oxley Work of 2002, but we would also be struggling to provide the complete and trustworthy audits the firm's clientele have come to anticipate.
The purpose of this idiota is to go over the results of the examine team's analysis of Alchemy Inc. 's internal controlsвЂ”including identifying lacking controls, control weaknesses, and opportunities to get fraudвЂ”and to recommend improvements to address virtually any weaknesses. In order to gain an understanding of Alchemy Incorporation. 's internal controls, we obtained and reviewed business policies and guidance, and also audits and reports done by the business internal examine department. We interviewed staff across the business regarding business policies, functions, and their particular job capabilities. These staff included managing, the internal review department, and staff in the receiving, shipping, and procedures departments. Additionally , the team executed a walk-through to observe the processes and regulates in place through the company. During our research of Alchemy Inc., our audit staff identified inside control disadvantages that leave Alchemy Inc. vulnerable to scam, errors, and abuse. As the team identified numerous control problems through the company, our memo explains only individuals control complications which the team believes as the most significant. All of us organized these kinds of weaknesses in to two distinct categories: (1) executive managing and inside audit office weaknesses, and (2) businesses (control weaknesses found in you can actually receiving, digesting, and shipping and delivery departments). Within these two categories, we labeled the weaknesses by seriousness (material disadvantages, significant deficiencies, and control deficiencies) and provided whatever we believe being cost effective recommendations for overcoming each one of these weaknesses.
Executive Managing and Inside Audit Department-
Current Control Environment, Oversight, and Monitoring Happen to be Material Weaknesses
At the executive supervision and inside audit department levels, they identified two internal control weaknesses, both these styles which stand for material weak points. These two material weaknesses are (1) a great ineffective control environment and (2) inadequate oversight and functioning from the internal taxation department, such as the department's risk assessment and internal control monitoring tasks....