Koss Corporation

In: Business and Management

Submitted By zimme
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1. I believe that the Principle Accounting Officer should also be required to attest to the effectiveness of internal controls over financial reporting, in addition to the CEO and CFO. In many corporations, the PAO is also the CFO, and because of their CFO role, are required to attest to the effectiveness of internal controls over financial reporting. In the Koss Corporation, Michael Koss held the roles of both CEO and CFO, so he was the only person required to attest to the effectiveness of internal controls over financial reporting. Whenever the sole responsibility of oversight lies on one person, the risk of fraud increases. Had there been two separate parties required to attest to the effectiveness of internal controls over financial reporting, collusion would have had to occur for both parties to attest falsely that the internal controls were effective over financial reporting.
2. The auditor should assess inherent risk at a higher level when one individual holds multiple C-level positions and Board of Director titles. Inherent risk is the susceptibility of an account or class of transactions to material misstatement assuming no related controls. Accounts that are more liquid or involve complex computations or estimates have a higher inherent risk. In the same manner, in situations where the full power of control rests on one person, auditors should assess inherent risk as higher. When a single person has control of two or more executive or leadership roles, they often have the power to override controls. One of their positions may be the control for another of their positions, thus rendering the control useless. In addition, an individual holding the power of multiple leadership roles may be able to intimidate employees into circumventing the controls in place.
3. Typically, an individual reaches CFO status by moving first earning a business…...

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