Micro Chip Corporation (MCC) has a special PO Box for customer payments. Jane is responsible for:

going to the post office every day,

emptying the post office box,

opening the mail,

making a prelist,

sending the remittance advices to accounts receivable, and

sending the checks to the cashier's office.

Micro Chip Corporation (MCC) has a special PO Box for customer payments. Jane is responsible for:

going to the post office every day, emptying the post office box,

opening the mail,

making a prelist,

sending the remittance advices to accounts receivable, and sending the checks to the cashier's office.

Jane has opening a business account at her bank for Master Cleaning Company (MCC). Several of Micro Chips checks are made out with only the initials MCC. Jane selects certain checks made out only with the initials MCC and deposits them in her business account. She would destroy the remittance advice.

1. Name two controls that would prevent or detect this fraud.

2. Name two audit procedures that might detect this fraud

3. If the fraud isn't detected and corrected, what will be the impact on the financial statements?

2nd question

You are auditing Green Corporation for the calendar year 2019. Among other items related to the audit, Green Corporation was being sued for personal injury resulting from the malfunction of one of their products. The lawsuit was initiated by Sue Ewe in September, 2019. Management and the company's outside legal counsel estimated the loss from the suit to be approximately $250,000. This amount is accrued and properly disclosed in the footnotes of the financial statements. You have no reason to believe that the estimate is inaccurate. You completed your audit and dated your report March 2, 2020. The financial statements were issued on March 14, 2020. On March 20, 2020, you read in a national business periodical that the jury in the trial awarded Sue Ewe $1.5 million.

Required:

Discuss the nature of these events and what responsibility, if any, you have regarding the news of March 20, 2020.