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BACKGROUND The control environment reflects the company's attitude awareness, and actions of management and the board concerning the importance of control and how it is used. This is very relevant to an auditor's consideration of inventories and should include: a) commitment to competence and HR policies and practices: b) integrity and ethical values and organizational structure and assignment of authortity and responsibility Central Park Associates CPAs is conducting an audit of a US manufacturing company When reviewing the company's inventory policy and physical inventory policy, the auditors noted the following facts 1) Physical inventory will be conducted this year by temporary workers, at a wage cheaper for management than the "regular" workers, 2) Approvals for purchase orders with discounts are not required any longer, 3) The shop manager is no longer responsible for the physical inventory. It is now the responsibility of the CFO, 4) The physical inventory will be held four days after year end. Required: For each of the following examples, name the aspect that is most affected by the decision made. Aspect choices: a) commitment to competence b) integrity and ethical values or c) organizational structure. Explain each answer using complete sentences 1. What aspect of the control environment is affected by the company's decision to hire temporary workers? 3 ances 2. What aspect of the control environment is affected by the company's decision to no longer require approvals for purchase order discounts? 3. What aspect of the control environment is affected by the company's decision to no longer have the shop manager in charge of Inventory? PINY Mc Next >

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