First Global Is a Public Company

question 8

Essay

First Global is a public company.You are currently performing the audit of the owners' equity section and you have been asked to write a short memo about the control weaknesses you have identified and the potential risk attached to each weakness.
First Global has been a public company since March of the current year,when it underwent its IPO.The corporation has been implementing various controls with regards to keeping records of the company,but it is still a growing company.Sasha,the equity accountant,has been having a tough time learning all the new regulations,keeping the records up to date,and ensuring that the dividend payments are made on time.
First Global issued two classes of shares in its IPO.Class A shares with 10 votes were issued to the Truman family so they could retain control of the company and Class B shares with 1 vote each were issued to the general public.When you reviewed the accounting records,you noticed that they contained only one account for capital stocks.
What control weaknesses are evident at First Global and what are their implications?

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