Explanation The problems in every given situation and possible solutions are given below: No. Problems and potential solutions a As per the Section 301 of Sarabanes-Oxley Act, the directors in the board must be independent of the company. The members of the audit committee must constitute the Board of directors. They should not be the employees of the company but must look after the internal control. b The person appointed as the treasurer must possess unscrupulous character and show high morality. The former employment of a person alone cannot be used to judge the morality of the employee. c The reason for changing the depreciation method could be reduce the expenses and increase the profits. There should however be a very important reason to support the sudden change of the depreciation method. d The vice president must be independent of the accounting functions. The board of directors needs to report to audit committee. e The management consists of the same family men at critical positions which may assist in a well-planned fraud. The authority to a person must be given only on the basis of their performance. f The management must modify the performance monitoring scheme as the performance evaluation must be more concise and not time consuming. g The company faces issues of declining value of the stock if the earnings per share decreases. The management in such situations tend to seek even illegal means to show better earnings...

Identify the problems in every given situation and relate them with the internal environment concept.

Accounting Information Systems (13th Edition)

13th Edition

ISBN: 9780133428537

Author: Marshall B. Romney, Paul J. Steinbart

Publisher: PEARSON

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Identify the problems in every given situation and relate them with the internal environment concept.

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