Koss Case

In: Business and Management

Submitted By HanyuLiu
Words 319
Pages 2
MACC 654
Koss Case
Hanyu Liu
1.I believe the Principal Accounting Officer (PAO) should attest to the effectiveness of internal control when that position is not also the CFO. The PAO has extensive knowledge of the accounting processes and control structures within the company so an attestation on internal control effectiveness would be pertinent. In the Koss case, the PAO is the one perpetrating the fraud so the attestation from the PAO would be unhelpful. However, I do believe the opinion of this position does matter on assessing internal control effectiveness. 2.When one individual holds that much control over an organization it becomes a huge inherent risk to the auditor. If one person is the CEO, CFO, and COO, there are not that many others who would question decisions or scrutinize certain actions of someone with that much power. There is clear ability for management override and therefore inherent risk should be set high for the auditor. Risk is mitigated with accountability, and in a case like this one there seems to be a huge lack of accountability among upper level executives. 3.I think there should be minimum education requirements for CFOs of publicly traded companies. Not many people become CFOs without some advanced degree. Most of the time the exception to that would be people without business degrees who inherit the position, like Michael Koss. For these people there should be an educational requirement. The reason is because investors rely on information that can be complex and must be reviewed and detailed by the CFO. That is a huge responsibility and I think it is appropriate that the job must come with relevant education.
The client acceptance decision could be impacted if the auditor assesses that there is too much risk with the CFO and proper financial statements. At that point it is up to the auditor to continue or…...

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