Auditing 2

Name : Ardiko Tias Putra (01031281621093)

M Husni Thamrin (01031381621175)

Auditing Case Study 1 about Simply Steam, Co.

Based on the information of this company, we have a few of key information that influenced
our decision, are:
1) Simply Steam, Co. Salespeople may sometimes negotiate special cut rates during the
slow spring and fall season that reported to Mr Day or Doug. However, Mr Doug
have trust in Mr. Day their office manager and can depend on his way of getting work
done from employees.So, Simply Steam, Co has neither weak or strong assignment of
authority and responsibility.

2) Management of Simply Steam, Co. have specify the competence for particular skills
of the employee but their hired none of accounting degree, So, Simply Steam, Co has
neither weakness nor strengthens in commitment to competence.

3) Board of Directors or committee members are not indepedent because Simply Steam,
Co they collect all of the checks and record at the end of the year because they does
not have an audit committee and do meeting schedule at least one meeting each year.
So, Simply Steam, Co has weak the boards of directors or audit commitee
participation.

4) The Operating Style of Simply Steam, Co is day-to-day operation and the business
risks of this company monitored with using a new accounting software, So,
management’s philosophy and operating style of Simply Steam, Co is neither weak or
strong.

5) The organization’s lines of authority and responsibilities are not clearly defined
because the job responsibilities are overlap between one person’s job and another’s.
Also Simply Steam, Co don’t have senior management to operate the policies. So,
Simply Steam, Co has weak organizational structure.

6) The assignment of responsibility and delegation of authority for goals and objectives,
operating functions, and regulatory requirements are some of them clearly to observes
and defined well. So, Simply Steam, Co has neither weak or strong assignment of
authority and responsibility.

7) Employees have the background and experience necessary for their job duties because
none of the clerks has an accounting degree and all except one employee are college
students majoring in accounting and the employees understand the duties and
procedures to their jobs.
Conclusion and Suggest

Mr. Day trains all new accounting staff and help when they are first hired, he
doesn’t recruit the proffesional accountant in that company. He also explains what
they need to know and how to do the job. The system in that company also not really
good because the division of task in each employess are lame overlap. We can
conclude that this company is weak control environment in most of the seven factors
or components comprising the overall of control environment.

From some of the above problems then we as the auditor suggested a few
things that should be a major concern for the company going forward so that the
company's management could be better yet, among others:

 Create a separation of functions, as well as management responsibilities sturktur clear

between the owner of the company.

 Recruit professional personnel for the accounting, financial reporting is expected to be

serving well

 Use a more modern accounting system to create the effectiveness and keefisiensian in the
preparation of the financial statements

 Create a good internal control system

 Fix the Board to create the management control