ABC3
| ABC Appliances Inc. | WP C.1. | |
| Evaluation of Control Environment | ||
| Potential Control Strengths | Potential Misstatement Detected or Corrected | |
| ABC uses a distributed computer system that gives employees who need access to data the appropriate access. | This improves the control environment because it all employees are working with one database, which reduces potential errors from multiple recording of data. | |
| ABC Appliances Inc. | WP C.1. | ||
| Evaluation of Control Environment | |||
| Potential Control Weakness | Potential Misstatement | Recommended Correction | |
| The case describes extensive use of policies and procedures; training new employees in these policies and procedures; and having yearly retraining sessions. However, it doesn't mention any on-going monitoring of employee behavior nor any use of employees' record of compliance with them in annual performance reviews. | Having clear policies and procedures with excellent training is good, but you also need some form of monitoring system to insure the emphasis and training is working. | Recommend that ABC implement annual reviews that include evaluation of how effectively employees are implementing firm policies and procedures. | |
| ABC Appliances Inc. | WP C.2. | |||
| Evaluation of Transaction Processing Control Design | ||||
| Potential Control Weakness | Potential Misstatement | Recommended Correction | Possible Weakness | |
| Sales | ||||
| Delivery | ||||
| ABC Appliances Inc. | WP C.2. | |||
| Evaluation of Transaction Processing Control Design | ||||
| Potential Control Weakness | Potential Misstatement | Recommended Correction | Possible Weakness | |
| Billing | ||||
| Collections Management and Write-offs | ||||
| ABC Appliances Inc. | WP C.2. | |||
| Evaluation of Transaction Processing Control Design | ||||
| Potential Control Weakness | Potential Misstatement | Recommended Correction | Possible Weakness | |
| Sales Returns | ||||
| Cash Receipts | ||||
| ABC Appliances Inc. | WP C.2. | |||
| Evaluation of Transaction Processing Control Design | ||||
| Potential Control Weakness | Potential Misstatement | Recommended Correction | Possible Weakness | |
| Merchandise Purchases | ||||
| Receipt of Goods | ||||
| ABC Appliances Inc. | WP C.2. | |||
| Evaluation of Transaction Processing Control Design | ||||
| Potential Control Weakness | Potential Misstatement | Recommended Correction | Possible Weakness | |
| Vouching and Recording Payables for Merchandise | ||||
| Non-merchandise Purchases and Services Received | ||||
| ABC Appliances Inc. | WP C.2. | |||
| Evaluation of Transaction Processing Control Design | ||||
| Potential Control Weakness | Potential Misstatement | Recommended Correction | Possible Weakness | |
| Cash Disbursements | ||||
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