Plastic Designs Ltd previously outsourced the internal audit services. The cost of outsourced internal audit services compelled the board of Plastic Designs to establish its own. The previous internal auditors compiled a summary of the following significant internal audit findings and presented them to the CAE to start the planning of audit engagements: 1) Password and logon controls for employees in finance department does not enforce password minimum length requirements which compromises confidential information of the company. 2) Plastic Designs Ltd started an internship programme hosting twenty (20) graduates across the company for the past five years. However, the programme has not been evaluated to ascertain whether it achieves its objectives. 3) Plastic Designs Ltd management is not prepared to spend time and resources on the development of corporate code of conduct. 4) The lack of debtors' management policy caused the company to write off bad-debts amounting to R3 million in 2019/2020 financial year. 5) In the past eight (8) months there have been four (4) key resignations in the quality department and management does not demonstrate interest in replacing replacement of those staff members. 6) Information from top management does not reach lower level employees which affects the ability to achieve operational objectives. 7) Potential impact of the waste produced from manufacturing processes on the surrounding environment had not be identified and assessed in the past ten.
Plastic Designs Ltd previously outsourced the internal audit services. The cost of outsourced internal audit services compelled the board of Plastic Designs to establish its own. The previous internal auditors compiled a summary of the following significant internal audit findings and presented them to the CAE to start the planning of audit engagements: 1) Password and logon controls for employees in finance department does not enforce password minimum length requirements which compromises confidential information of the company. 2) Plastic Designs Ltd started an internship programme hosting twenty (20) graduates across the company for the past five years. However, the programme has not been evaluated to ascertain whether it achieves its objectives. 3) Plastic Designs Ltd management is not prepared to spend time and resources on the development of corporate code of conduct. 4) The lack of debtors' management policy caused the company to write off bad-debts amounting to R3 million in 2019/2020 financial year. 5) In the past eight (8) months there have been four (4) key resignations in the quality department and management does not demonstrate interest in replacing replacement of those staff members. 6) Information from top management does not reach lower level employees which affects the ability to achieve operational objectives. 7) Potential impact of the waste produced from manufacturing processes on the surrounding environment had not be identified and assessed in the past ten.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Based on the information in scenario A: Classify findings (1 – 7) according to the five components of the COSO
internal control framework.
Transcribed Image Text:Plastic Designs Ltd previously outsourced the internal audit services. The cost of outsourced
internal audit services compelled the board of Plastic Designs to establish its own. The
previous internal auditors compiled a summary of the following significant internal audit
findings and presented them to the CAE to start the planning of audit engagements:
1) Password and logon controls for employees in finance department does not enforce
password minimum length requirements which compromises confidential information of
the company.-
2) Plastic Designs Ltd started an internship programme hosting twenty (20) graduates
across the company for the past five years. However, the programme has not been
evaluated to ascertain whether it achieves its objectives.
3) Plastic Designs Ltd management is not prepared to spend time and resources on the
development of corporate code of conduct.
4) The lack of debtors' management policy caused the company to write off bad-debts
amounting to R3 million in 2019/2020 financial year.
5) In the past eight (8) months there have been four (4) key resignations in the quality
department and management does not demonstrate interest in replacing replacement of
those staff members.
6) Information from top management does not reach lower level employees which affects
the ability to achieve operational objectives.
7) Potential impact of the waste produced from manufacturing processes on the surrounding
environment had not be identified and assessed in the past ten.
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