Smart Start Company Is a Hardware Supplier to Building Contractors

question 3

Essay

Smart Start Company is a hardware supplier to building contractors. At the end of each month, the employee who maintains all of the inventory records takes a physical inventory of the firm's stock. When discrepancies occur between the recorded inventory and the physical count, the employee changes the physical count to agree with the records.
Required:
A. What problems could arise as a result of Smart Start Company's inventory procedures?
B. How could the internal control system be strengthened to eliminate the potential problems?
C. What are the implications of SOX sections 302 and 404 for the company's internal control issues?

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Definitions:

Prospective Cohort Study

A longitudinal study in which subjects are followed over time to observe outcomes, such as the development of diseases, after exposure to certain risk factors.

Systematic Sample

A sampling method where elements are selected from an ordered population using a fixed periodic interval.

Occupational Group

Refers to a categorization of jobs that individuals hold based on similarities in job duties, skill, education, and/or training requirements.

Baseline Examination

An initial set of tests or assessments conducted to understand the health status or condition of an individual or group before the commencement of a study or treatment.