DCH is a wholesale purveyor of meats, fish, fruits, and vegetables. It has operations in sixteen urban markets. The company sources the product from producers, warehouses it in refrigeration and sells it to customers. 

Required:

1. Based on all the information provided so far, assume that the payroll function will be considered for outsourcing by a third party. Create  list of "user controls considerations" that includes controls that would be the responsibility of DCH as a user-entity. These controls would be tested by the internal audit department.
2. For each control to be tested by the internal audit department in (1) identify:
   1. The population to be tested
   2. The test to be performed 

Including all the information provided so far about DCH, recommend a risk management process that would govern the "internal audit department" work.a.     A risk management process will begin with a charter from the Board, through the Audit Committee

b.     After setting up an internal audit department, reporting directly to the Audit Committee, the IA should perform:

        i.      general evaluation of all operational and financial area

 ii.     Identification of a high risk operational and financial processes

 iii.     Testing the performance, efficiency, and waste/risk-for-fraud from high risk area

  iv.     Report to the Audit committee, including recommendations for improvement v.     Re-cycle the process after recommendations are implemented

 

2.     Describe potential control risks that could exist based on the top-level flow-chart that was provided.

a.     Posting COD sales does not undergo review

b.     Sales report is posted to monthly package without review

c.      Monthly and Quarterly packages are not reconciled

d.     BOL posted to SAS without review

e.     No inventory count and/or reconciliation

f.       No scrap accounting or reconciliation