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The document discusses completing questionnaires to evaluate the corporate governance and internal control environment of EarthWear Clothiers, Inc. It includes memos on corporate governance, control environment issues, and internal control components. The respondent is to answer questions 1, 7, 12, 17, 19, and 21 in the control environment questionnaire based on the information provided.

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Natalija York
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179 views

Assignment Print View

The document discusses completing questionnaires to evaluate the corporate governance and internal control environment of EarthWear Clothiers, Inc. It includes memos on corporate governance, control environment issues, and internal control components. The respondent is to answer questions 1, 7, 12, 17, 19, and 21 in the control environment questionnaire based on the information provided.

Uploaded by

Natalija York
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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4/3/2021 Assignment Print View

In this mini-case you will complete questionnaires for evaluating the corporate governance and internal control environment of EarthWear Clothiers, Inc.
 
Double-click on the following icons (documents will open in Microsoft Word) and read the memos on Corporate Governance and Control Environment Issues and
Internal Control Components. Refer back to these memos as you answer the questionnaires.
 

                                                                                  

 
1. Award: 25.00 points  

Using the information outlined in the memos above and answers to other questions in the questionnaires, complete questions 1, 7, 12, 17, 19, and 21 of the
Control Environment Questionnaire.

Control Environment Questionnaire

Question Yes, No Comments


1. Are there regular meetings of the board of directors (or comparable
bodies) to set policies and objectives, review the entity’s performance,
and take appropriate action, and are minutes of such meetings prepared
and signed on a timely basis?

Yes
2. Does an audit committee exist? Yes
3. Does the audit committee adequately assist the board in maintaining a
direct line of communication with the entity’s external and internal The audit committee meets with the external and interna
auditors? Yes auditors on a quarterly basis.
4. Does the audit committee have adequate resources and authority to
discharge its responsibilities? Yes
5. Is this evidenced by The audit committee also meets quarterly, just prior to t
Regular meetings? quarterly board of directors meeting. Minutes are mainta
The appointment of qualified members? each meeting. The audit committee consists only of ind
Minutes of meetings? Yes who are not part of management.
6. Are management and operating decisions dominated by one or a few
individuals? No
7. Are business risks adequately monitored? Yes

8. Is management willing to adjust the financial statements for


misstatements that approach a material amount? Yes
9. Does management adequately consult with its auditors on accounting
issues? Yes
10. Has management been responsive to prior recommendations from its
auditors? Yes
11. Is a high priority given to internal control? Yes
12. Is the organization of the entity clearly defined in terms of lines of (Click to select)
authority and responsibility?

13. Are controls for authorization of transactions established at an adequately


high level? Yes
14. Are such controls adequately adhered to? Yes
15. Is the organizational structure appropriate for the size and complexity of
the entity? Yes
16. Has management established policies for developing and modifying
accounting systems and control activities? Yes
17. Is data processing centralized or decentralized? (Click to select)

18. Is there a clear assignment of responsibility and delegation of authority to


deal with such matters as organizational goals and objectives, operating
functions, and regulatory requirements? Yes
19. Are employee job responsibilities, including specific duties, reporting (Click to select)

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4/3/2021 Assignment Print View
relationships, and constraints, clearly established and communicated to
employees?

20. Has management clearly communicated the scope of authority and


responsibility to data processing management? Yes
21. Does adequate computer systems documentation indicate the controls for (Click to select)
authorizing transactions and approving systems changes?

22. Is there adequate documentation of data processing controls? Yes


23. Do client accounting personnel appear to have the background and
experience for their duties? Yes
24. Do client accounting personnel understand the duties and procedures
applicable to their jobs? Yes
25. Is the turnover of accounting personnel relatively low? Yes There has been no turnover in the last three years.
26. Does the entity adequately train new accounting personnel? Yes
27. Does the workload of accounting personnel appear to permit them to
control the quality of their work? Yes
28. Does previous experience with the client indicate sufficient integrity on the
part of personnel? Yes

References

Worksheet Learning Objective: 06-05 Be Learning Objective: 06-08 Be familiar with the tools available for
familiar with the components of documenting the understanding of internal control.
internal control together with the
principles associated with each
component.

Difficulty: 2 Medium Learning Objective: 06-07 Know


how to develop an understanding
of an entity's internal control.

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