Companies can gain efficiencies by implementing effective monitoring of their internal control processes

5-42 (Monitoring Activities) Companies can gain efficiencies by implementing effective monitoring of their internal control processes.

Required:
a. Explain the importance of monitoring and provide examples of monitoring.
b. Identify the important monitoring procedures that a company might use in assessing its controls over revenue recognition and costs that might be utilized in each of the following situations:
• A convenience store such as a 7-Eleven
• A chain restaurant such as Olive Garden
• A manufacturing division making rubberized containers for the consumer market
c. Can the auditor focus the assessment of internal control on testing the effectiveness of the company’s monitoring? Discuss and support your conclusion. Discuss, for example, the level of comfort the auditor can get about the effectiveness of other controls by testing the effectiveness of monitoring controls.


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Software Associates (SA) is a computer software consulting firm that specializes in designing and implementing integrated marketing database warehousing programs

P 12–17: Software Associates

Software Associates (SA) is a computer software consulting firm that specializes in designing and implementing integrated marketing database warehousing programs. Humphrey Catalog is a client.

In preparing its bid for Humphrey, SA estimates its total labor cost for this project to be $222,500, broken down as follows:

Required:
a. Prepare a performance report for the Humphrey Catalog project.
b. Offer a plausible explanation for SA’s performance on the Humphrey project.

Click here for the solution: Software Associates (SA) is a computer software consulting firm that specializes in designing and implementing integrated marketing database warehousing programs