get more
assistance regarding the internal controls. When the meeting was
held with Abe Johnson it was clear that there was no efficence on
internal controls. Also, the board of directors charter explains
that the board does a lot of things to assist CSN. However, the
permanent file says that the only person on the board that assists
the company is the audit committee board member. That was clear
enough to the audit staff and myself that their control enviornment
was ineffective. The second control is
riskassessment.
Evaulating risk assessment involves identifing whether
managementhas implemented controls to leviate risky areas that
may lead to matieral misstatements. When Johnson was asked about
risk assessment, he seemed to brush it off.
There seems to be a huge issue with risk assessment regarding
their accounts receivable. It seems to the audit team that there
could potentially be more accounts that need to be written-off. CSN
may not be identifying and analyzing all the accounts that they
have because some accounts are over 90 days due. That is a huge
risk assessment concern. Also, there may be an issue regarding
invetory because their
inventoryis
higher compared to the rest of the industry and there were issues
with invetory the year before. There
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The information
and communication controls cannot be completely ineffective because
the amount of people working at CSN is small. As a result, some of
the accounting system can be done mannual. CSN seems to have an
effective way of processing expenditure processes and sales
transactions. However, the IT system seems poor and is not
up-to-date. The main reason for that is the head management does
not seem to care whether the information is processed mannually or
the computer has virsuses. As a result, the controls are borderline
ineffective. However, their mannual controls and their ability to
prepare sales orders seems to be
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