Description

ACC 450/550 FALL 2019

INTERNAL AUDIT REPORT PROJECT – CASCADE CORPORATION

Requirements (generally, previous students had in lower double figures in number of pages 12-14):

Must have following (this is the most writing, but actually the easiest assignment of the three):

 

Cover sheet with distribution list (list of who receives report - appropriate to findings, must have proper titles and names – line-up both columns – do not center each line).  Do not forget date and title and exactly what kind of report is this.  Suggest that TITLE (make sure that you have indicated the company and type of report – WHAT CLASS IS THIS?) is at top about 1/3 the way down, distribution list in middle, and date about 1/3 from bottom.  Try to somewhat center distribution list, but first letters of first names and titles must line-up exactly, so cannot center whole list.

 

                                    Al Kaline                    VP Finance

                                    Miguel Cabrera        VP Engineering

                                    Willy Horton              VP Purchasing

                                    Justin Verlander      VP Human Resources

                                    Gordie Howe             AVP Controller

                                    Tiger Woods              VP Investor Relations

                                    Duane Borkowski    External Auditor Partner

                                    D. Robert Okopny    Chief Audit Executive

                                    Your Name                Manager, Internal Audit

 

Table of Contents (all caps second page) – generally don’t use dots, and page numbers must line up, do not put the word page next to every page number (put above the column of pages) and should not have 20 page numbers.  Keep page numbers to sections only. If do sections, then indent subsections.

 

EACH OF THE FOLLOWING HEADINGS MUST BE CENTERED ALL CAPITAL LETTERS (These are the primary main sections) – they are not centered here as I am putting explanations.  Do not ever write next to any heading.

 

Executive Summary – decide what might be important enough for high level executives, such as the BOD and audit committee regarding your results (this is not just a repeat of the findings).  Some may be important, some not.  Do this section last.  Remember the high-level executives do not want extremely detailed information. (DOUBLE SPACE)

 

Background – Summarize information of the entity using an appropriate amount of the information I give to you, required by key senior management based on the background data provided – Be sure to evaluate and analyze what is key to the audit report.  Senior company management and the Audit Committee have limited time and would like to focus on the important areas.  Use information below and you can make up anything else needed.  Write as someone who is an internal auditor (employee) of Cascade Corporation (LC), not an external consulting internal auditor. (DOUBLE SPACE)

 

Audit Scope and Purpose – Needs to be developed based on the audit findings.  Need paragraph or few lines on each.  What is the scope of the audit and what is the primary purpose.  Remember the definition of internal auditing.  This should be one or two short paragraphs and can be one section. (DOUBLE SPACE)

 

Write up of Findings – these are the problems, issues, opportunities or whatever you want to call them SEE FORMAT below.  There is a required hierarchy given below – this is the most important part of the report.  Each section can be single spaced with a space between each section.

                                               

Write up of Recommendations – to fix the problems – this is one item in the list of items for every finding.

 

Reply – insert a heading for a Reply for each finding, but you do not need to provide any writing as this space would normally be used by the “auditee”.  This is the only heading that can be at the bottom of the page without text following it.

           

Summary, must include an OVERALL evaluation of entity (use an appropriate key developed by you) - this is a necessary section, and this is not a repeat of the individual findings and an evaluation of those - will be marked down at least 5 points for no overall evaluation.  Similar to a grade in class, or personnel performance review, but not using the same scale (do not use grades).  Hint: a table may be necessary, but still need one overall evaluation in this section which is a conclusion for the whole audit (underline it so, I can easily see).  Many students forget to do this and lose points.  No matter what you evaluate each finding; you must have an overall evaluation for the auditee (Cascade Corporation).  I suggest that you send to me to review when close to done as I can save you many easy points.  Not including the overall evaluation of the total findings is most missed section.

 

Organize each finding (use name for the finding, not the word finding e.g. Missing Cash Deposit), Recommendation, and Reply by Department – you (not me) have to decide which departments match to specific findings (as usually do not use any personal pronouns – I, me, we, and especially you as in “you know’ dude:

 

You must make up (Be creative) what you do not have for the write-ups below.  The information should make some rationale sense.

 

Findings to write-up - EVERYONE MUST USE THE SAME DATA.  A PRIMARY PART OF YOUR GRADE WILL BE BASED ON HOW THESE FINDINGS ARE DEVELOPED, NOT JUST WHAT WAS GIVEN TO YOU – just repeating gets you about 50 percent.  THIS IS THE MAJOR PART OF THE ASSIGNMENT. This has no relationship to the past two assignments. Company is a large food services provider.

 

1.         Employees at the Utica, MI golf club factory facility were observed in the grinding machine area without protective equipment (protective glasses). One other employee was treated for eye irritations in this area due to a lack of safety glasses. And, two employees were diagnosed with lung disorders from not wearing masks in the buffing room processes which produces large floating debris.

 

2.         The required background checks for all new employees were not performed by Human Resources. The corporation had two new sales representatives who committed fraud on their expense reports when they were visiting golf courses across the country.  Background checks later were found that they had criminal backgrounds. This loss totaled a $9,051.  Additionally, ICE raided the manufacturing facility and found 2 other employees who were illegal aliens who used false social security information to be hired. This hit the local news.

 

3.         Industrial Engineering did not submit timely cost standards for establishing direct labor usage data required for developing budgeted labor costs for the standard cost budgeting system.  This caused faulty 2018 standards costing and quantity and variance analyses leading to weaknesses in the budget analyses and underpricing for products sold costing $232,474.