ACC - Strategic Auditing Assignment

Assignment

In August 2013, Miriam noticed that some of the client

accounts were becoming seriously depleted without any

apparent reason. In addition, clients’ petty cash accounts

were being used more often than usual. The Legal Services

department notified Miriam of changes to clients’

wills that, while not unusual, weren’t frequent occurrences.

Miriam wanted to investigate these apparent

anomalies and make the necessary changes.

Your assignment is to address each of the following

questions:

1. In general, what are the major objectives of internal

control? What is their purpose?

2. What are the risks associated with providing financial

services such as those of a trustee? Classify each risk as

(1) high, (2) medium, or (3) low.

3. Review the processes outlined in the case and indicate

where:

a. Controls should be in place but do not exist, and

b. Controls are in place but aren’t working effectively.

4. For each of the controls that are in place, or should

be, identify whether that control is preventive or

detective.

5. Was NCT’s senior management adequately performing

its fiduciary responsibilities on behalf of its clients (see

Figure 5)? Give an example of how it was, or was not,

meeting its responsibilities.

6. What are the ethical responsibilities of senior management

toward its clients?

7. How would you test whether inappropriate activity

(potential fraud) had occurred?