Williams Oil Services Co.Case Study And Analysis Help With Solution
(Learning Objectives 2, 4:
Explain the components of internal control; evaluate internal controls) Each of the following situations reveals an internal control weakness:
Situation a. In evaluating the internal control over inventory for the Williams Oil Services Company, an auditor learns that the warehouse receiving clerk is responsible for ordering parts for supply inventory use in drilling services, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk’s work.
Situation b. Nicole Lopez handles employee travel and expense reports for Scott Sales Services. With the growth in the economy, the sales team began traveling extensively gaining new business. Because of the heavy volume, she no longer required the sales team to provide original airline, hotel, or car rental receipts. She told them to just keep their meals under the $100 per day per diem and no receipts were required. She allowed them to use their own credit cards so they could get the frequent flyer points. She required them to turn in a summary of the travel expenses quarterly.
Situation c. Michael Jordon is a new employee hired from Craig’s List recommended by a co-worker. Mike was hired as a Human Resource Assistant. Mike’s first day on the job he is told that he should follow his own judgments when deciding how employee issues such as hiring and firing of employees, sexual harassment, and ethical infractions should be handled.
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• 1. Identify the missing internal control characteristic in each situation.
• 2. Identify each firm’s possible problem.
• 3. Propose a solution to the problem.
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