Board of Directors Disclosures. The board of directors of Celestial City Corporation of Taejon, Korea, is issuing a corporate governance report. In this audit year Celestial City lost 1,280,000,000 South Korean Won (won) due to a weakness in their internal controls in the treasury department which represents 11 percent of their current assets.

The controller’s assistant, Dongsung Young, who, a Certified Public Accountant (CPA), is asked to write the first draft of the internal control portion of the report.

Required:

Pretend that you are Mr Dongsung and write a draft of the internal controls portion of Celestial City Corporation’s corporate governance report. Since Celestial City is publicly traded on the American Stock Exchange and a Depository Receipt use the Sarbanes-Oxley Act (SOX)

section 404 requirements for the report. (See PCAOB, 2004, Auditing Standard No 2 An Audit Of Internal Control Over Financial Reporting Performed In Conjunction With An Audit Of Financial Statements,” Public Company Accounting Oversight Board, 9 March. At time of this writing, PCAOB website was at www.pcaobus.org/documents/rules_of_the_Board