Risk/control Matrix
Aaron Is the President of ARB Corporation

question 5

Essay

Risk/control matrix
Aaron is the president of ARB Corporation. He recently made the following comments in a management meeting: Our fraud examination department recently discovered that employees in the purchasing department have been ordering goods for personal use. Inventory and cash are two of our most critical assets; it's therefore important that we only order the inventory items we need. While pre-numbered documents and separation of duties can help, it's also important to hire employees with integrity. Now that we have a good computer system for detecting fraud, I plan to hold meetings like this periodically to let you know how we're doing. Thanks for your attention.
Consider the following phrases from Aaron's speech and the structure of a risk/control matrix.
(1) In the first column, indicate whether each item is: (a) a control objective, (b) WCGW, (c) a control or (d) none of the above.
(2) For items you classify as "controls" in the first column, use the "PDMA" coding system to classify them in the second column.
(3) For each item listed in the first column, use the "ERAIM" coding system to indicate the relevant part of COSO in the third column. $$\begin{array} { | l | l | l | l | } \hline & \text { Matrix element } & \text { PDMA } & \text { ERAIM } \\\hline \text { 1. computer system for detecting fraud } & & & \\\hline \text { 2. hire employees with integrity } & & & \\\hline \text { 3. hold meetings } & & & \\\hline \text { 4. order the inventory items we need } & & & \\\hline \text { 5. ordering goods for personal use } & & & \\\hline \text { 6. pre-numbered documents } & & & \\\hline \text { 7. separation of duties } & & & \\\hline\end{array}$$

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