Highest Level of Deficiency Case

Highest Level of Deficiency Case

ACC 410 Auditing

For each of the following independent cases, state the highest level of deficiency that you believe the circumstances represent - a control deficiency, a significant deficiency, or a material weakness. Explain your decision in each case.

Case 1

The company processes a significant number of routine intercompany transactions. Individual intercompany transactions are not material and primarily relate to balance sheet activity--- for example, cash transfers between business units to finance normal operations. A formal management policy requires monthly reconciliation of intercompany accounts and confirmation of balances between business units. However there is not a process in place to ensure performance of...