Easyclean

ACCT 803: Group Case Project #2

Easy Clean, Co.

Internal Control Environment Assessment

Daisuke Inoue

Kevin Jenck

Yu Kurebayashi

Ting Lai

Jimmy Lau

MEMORANDUM

To: Professor Mike Braswell

From: D. Inoue, K. Jenck, Y. Kurebayashi, T. Lai, and J. Lau

Date: 5/21/2013

Subject: Evaluation of Internal Control Environment for Easy Clean, Co.

Purpose:

As auditors for our new client, Easy Clean, Co. (who has previously never been audited), we must identify the strength of their internal control environment to insure that it supports the following: the effectiveness of their operations, reliability of financial reporting, and compliance with the law. The purpose of our evaluation is to determine the preliminary control risk of our control environment in order to check whether it is working to support the company’s objectives or whether there is a risk or material misstatement because of poor implementation of controls.

Mode of Procedure:

In order to gain the greatest insight into our clients control environment we have conducted thorough interviews and reviewed interview responses to identify the effective reality of how well the controls actually work. These interviews were conducted with both management and staff in order to gain a better understanding of how and why the control environment is set up the way it is. All questions were geared towards gaining the most information about whether or not the intended control is functioning the way it should and whether there are areas where internal controls are lacking.

Outside of interviews we physically observed our client’s physical location in order to witness the effectiveness of internal controls; these observations specifically helped us to assess physical safeguards of assets, control over assets, segregation of duties, dual custody, and internal controls related to documents and record keeping. These observations gave us even more insight into where...