wILL SOMEONE PLEASE ASSIST ME WITH THIS ASSISGNMENT 32 Preview Company, a divers

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wILL SOMEONE PLEASE ASSIST ME WITH THIS ASSISGNMENT

32  Preview Company, a diversified manufacturer, has five divisions that operate throughout the United States and Mexico. Preview has historically allowed its divisions to operate autonomously; corporate intervention occurred only when planned results were not obtained. Corporate management has high integrity, but the board of directors and audit committee are not very active.  Preview has a policy of hiring competent people. The company has a code of conduct, but employee compensation packages depend highly on performance. Preview Company does not have an internal audit department and it relies on your firm to review the controls in each division.

Chip Harris is the general manager of the Fabricator Division. The fabricator Division produces a variety of standardized parts for small appliances. Harris has been the general manager for the last seven years and each year he has been able to improve the profitability of the Division. Much of the improvement in the profitability has come through aggressive cost cutting, including substantial price reductions in control activities over inventory

  During last year, a new competitor has entered Fabricator

Explanation / Answer

a. Strengths of Preview Company: 1. Employee compensation packages depend on performance, 2. High integrity of corporate management, 3. Management is fairly conservative in terms of accounting principles and practices, Weaknesses of Preview Company: 1. The board of directors and audit committee are not very active, 2. Corporate intervention occurred only when planned results were not obtained. 3. There is no internal audit department. b. Factors that leads to manipulation of inventory: 1. Internal audit department is essential in every organization it wills controls this types of manipulations. 2. There is no certain inventory control system, 3. Corporate intervention is required if get planned results also, 4. In organization every one should be active. 5. Some times Employee compensation won't depend on performance.
     

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