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ABC3

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ABC Appliances Inc.	WP C.1.
Evaluation of Control Environment
Potential Control Strengths	Potential Misstatement Detected or Corrected
ABC uses a distributed computer system that gives employees who need access to data the appropriate access.	This improves the control environment because it all employees are working with one database, which reduces potential errors from multiple recording of data.

ABC Appliances Inc.	WP C.1.
Evaluation of Control Environment
Potential Control Weakness	Potential Misstatement	Recommended Correction
The case describes extensive use of policies and procedures; training new employees in these policies and procedures; and having yearly retraining sessions. However, it doesn't mention any on-going monitoring of employee behavior nor any use of employees' record of compliance with them in annual performance reviews.	Having clear policies and procedures with excellent training is good, but you also need some form of monitoring system to insure the emphasis and training is working.	Recommend that ABC implement annual reviews that include evaluation of how effectively employees are implementing firm policies and procedures.

ABC Appliances Inc.	WP C.2.
Evaluation of Transaction Processing Control Design
Potential Control Weakness	Potential Misstatement	Recommended Correction	Possible Weakness
*Sales*




*Delivery*

ABC Appliances Inc.	WP C.2.
Evaluation of Transaction Processing Control Design
Potential Control Weakness	Potential Misstatement	Recommended Correction	Possible Weakness
*Billing*




*Collections Management and Write-offs*

ABC Appliances Inc.	WP C.2.
Evaluation of Transaction Processing Control Design
Potential Control Weakness	Potential Misstatement	Recommended Correction	Possible Weakness
*Sales Returns*




*Cash Receipts*

ABC Appliances Inc.	WP C.2.
Evaluation of Transaction Processing Control Design
Potential Control Weakness	Potential Misstatement	Recommended Correction	Possible Weakness
*Merchandise Purchases*




*Receipt of Goods*

ABC Appliances Inc.	WP C.2.
Evaluation of Transaction Processing Control Design
Potential Control Weakness	Potential Misstatement	Recommended Correction	Possible Weakness
*Vouching and Recording Payables for Merchandise*




*Non-merchandise Purchases and Services Received*

ABC Appliances Inc.	WP C.2.
Evaluation of Transaction Processing Control Design
Potential Control Weakness	Potential Misstatement	Recommended Correction	Possible Weakness
*Cash Disbursements*

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