INTERNAL AUDIT REPORT PROJECT COEUR dALENE CORPORATION

Executive Summary decide what might be important enough for high level executives, such as the BOD and audit committee regarding your results (this is not just a repeat of the findings). Some may be important, some not. Do this section last. Remember the high-level executives do not want extremely detailed information. (DOUBLE SPACE)

Background Summarize information of the entity using an appropriate amount of the information I give to you, required by key senior management based on the background data provided Be sure to evaluate and analyze what is key to the audit report. Senior company management and the Audit Committee have limited time and would like to focus on the important areas. Use information below and you can make up anything else needed. Write as someone who is an internal auditor (employee) of COEUR dALENE CORPORATION, not an external consulting internal auditor. (DOUBLE SPACE)

Audit Scope and Purpose Needs to be developed based on the audit findings. Need paragraph or few lines on each. What is the scope of the audit and what is the primary purpose? Remember the definition of internal auditing. This should be one or two short paragraphs and can be one section. (DOUBLE SPACE)

Write up of Findings these are the problems, issues, opportunities or whatever you want to call them SEE FORMAT below. There is a required hierarchy given below this is the most important part of the report. Each section can be single spaced with a space between each section.

Write up of Recommendations to fix the problems this is one item in the list of items for every finding.

Reply insert a heading for a Reply for each finding, but you do not need to provide any writing as this space would normally be used by the auditee. This is the only heading that can be at the bottom of the page without text following it.

Summary, must include an OVERALL evaluation of entity (use an appropriate key developed by you) - this is a necessary section, and this is not a repeat of the individual findings and an evaluation of those - will be marked down at least 5 points for no overall evaluation. Similar to a grade in class, or personnel performance review, but not using the same scale (do not use grades). Hint: a table may be necessary, but still need one overall evaluation in this section which is a conclusion for the whole audit (underline it so, I can easily see should now be a paragraph or multiple lines). Many students forget to do this and lose points (10%). No matter what you evaluate each finding; you must have an overall evaluation for the auditee (Coeur dAlene Corporation). I suggest that you send to me to review when close to done as I can save you many easy points. Not including the overall evaluation of the total findings is most missed section.

Organize each finding (use name for the finding, not the word finding e.g. Missing Cash Deposit), Recommendation, and Reply by Department you (not me) have to decide which departments match to specific findings (as usually do not use any personal pronouns I, me, we, and especially you as in you know dude:

Findings to write-up - EVERYONE MUST USE THE SAME DATA. A PRIMARY PART OF YOUR GRADE WILL BE BASED ON HOW THESE FINDINGS ARE DEVELOPED, NOT JUST WHAT WAS GIVEN TO YOU just repeating gets you about 50 percent. THIS IS THE MAJOR PART OF THE ASSIGNMENT. This has no relationship to the past two assignments. Company is a large food services provider.

1. Some employees at the Shelby Township (Utica), MI golf club factory were observed throwing toxic materials in the back of the grounds. This area is right next to four little league fields, which are packed with families from April through August each year. Additionally, two employees were diagnosed with lung disorders possibly from this material. Both issues open the company up to reputational damage and large lawsuits. And, more importantly, negatively affecting the health of employees and the public.

2. Industrial Engineering did not submit timely cost standards for establishing direct material standards data required for developing budgeted material costs for the standard cost budgeting system. This caused faulty 2021 standards costing and price variance analyses leading to weaknesses in the budget analyses and underpricing for products sold costing $100,556.

3. Nothing has been implemented after a lengthy review of corporate social media policies in the beginning of 2020. Some employee behavior has been questioned in the press and customers have had negative comments sent to the corporation. Three new hires from local colleges in the northeast United States were fired in their first week on the job. Implementation of these policies is usually through employee education including online courses and through post training testing of what was learned.

4. A private facility was outsourced to handled golf lessons in Wuhan, China in early 2018 (many months before the virus outbreak) but they did not comply with the $1,374,030 contract. It was found that the contract did not contain a right-to-audit clause included in all company contracts. Such a clause is standard for all construction projects and any outsourced activity. These clauses protect the company and enable tracking of potential cost overruns and subsequent return of payments. This has nothing to do with Sales, or HR.

5. The required background checks for all new employees were not performed by Human Resources. The corporation had two new sales representatives who committed fraud on their expense reports when they were visiting golf courses across multiple countries. Background checks performed after the fact found that they had criminal backgrounds. This loss totaled a $47,214. Additionally, ICE raided the manufacturing facility in Toledo, OH and found 2 other employees who were illegal aliens who used false social security information to be hired. This hit the Toledo, Detroit, and Cleveland local news reports. Fortunately, some of the new HR professionals who graduated from the Eastern Michigan University HR program did do the proper checks.

6. One very expensive ($9,002,078) Super Bowl advertisement was criticized in the press and on social media. It was found that the usual focus group testing was not performed. This ad was pulled from future use and wasted the additional cost of producing the advertisement of $3,000,008.

7. An external investment analyst found some oddities in the financial statements. After sharing reports between the external and internal audit teams, it was found that the financial statements were changed just before the end of the year to improve operating income. These changes were made by the consolidation team.

Example of one finding (these are headings without content): Use this format do not right justify anything, do use hanging indents, be consistent. Do not use embedded headings. Copy the following exact format. Area has roman numerals, first finding in that area has letter, then follow with Condition, etc. Do not use dashes, and do not write on the same line as a heading. It looks better if you single space within each item, then double space between each item. Definitions of these categories are at the end of this sheet and also in the ISPPIAs and Gleim.

FINDINGS

I. TREASURY (This is an example of a department; you must select all departments based on the seven findings)

1. Unapproved Cash Payments (The name of the finding given by you MUST STATE AS A NEGATIVE AND DESCRIPTIVE ENOUGH SO READER KNOWS WHAT IS BEING DISCUSSED SHOULD NEVER BE MORE THAN ONE LINE) this is a heading, do not ever put text or a dash and text next to a heading

Condition

Start your discussion here (under the heading). The meaning of these headings will be discussed in class. They are also in the Gleim book and in the ISPPIAs.

Criteria

Cause

Effect

Recommendation

Reply (This is the only heading which can be at the bottom of the page without text).

COEUR dALENE CORPORATION

Total employees 1,227 (167 salaried, 1,060 hourly)

• Total payroll Salaried -- $1.8 million, Hourly -- $8.4
• Hourly work force unionized in Argentina, Mexico, China, Peru, Philippines and U.S.
• Total Benefits $2.7 million
• Purchasing Department 6 employees, including 1 temp
• Industrial Engineering 5 employees
• Human Resources 16 employees
• Annual purchases -- $332.0 million
• Total Revenue $1.5 billion
• Accounts Payable highly centralized with 11 employees
• Advertising and Marketing 22 employees
• Annual project expenses -- $207.1 million
• Research Centers in U.S. (Utica, MI), China (Hangzhou, China) and Puerto Cinco, Mexico
• Plant in China just recently expanded
• Accounts Payable system launched in second quarter 2020
• EPS for 2021 $2.32; a decrease from $2.47 in 2020
• Accounts Receivable totaled $407.0 million
• New line of credit established with Hemisphere Bank International
• New wedge product line was launched in the last half 2021
• Accounts Receivable call center co-sourced in Uzbekistan
• New general ledger system launched in 2019
• Purchasing system upgraded with the general ledger system launch
• P-cards launched in U.S. and Canada replacing the petty cash in 2020
• Integrated Employee Relations system launched with the general ledger system in 2018
• Employees who travel are issued AMEX P-cards, although they are not used in China
• Logistics has been re-sourced to a new supplier
• Work force at the Michigan facility expanded after receiving tax incentives for re-training in 2018
• Additional common stock shares issued in June 2018
• Additional long-term debt issued in August 2020

SUMMARY

Make sure to include an overall evaluation in summary, use some type of evaluation system. Overall means not just evaluating each finding, but overall, for the internal audit of CdA Corporation.

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