P10.

1
a) Members of the Audit Committee must be independent members (not executives).
These members can be corporate controller, treasurer, financial vice president or
budget director but in other companies.
b) GoGo is at risk by hiring an employee with a criminal record as a treasurer - who
is committed to integrity and ethical values. GoGo should review its HR
department's hiring policy.
c) The manager did not give any practical reason for changing the method of
depreciation. The manager must give a reasonable reason to validate this change in
accounting estimates.
d) It is not reasonable for the internal audit department to be subordinate to the
financial vice president. GoGo needs to look at restructuring of the business,
arranging that the internal audit department will be under the general manager or
board of directors, not the financial vice president.
e) The concentration of power of the whole company on the three brothers carries the
risk of conflicts of interest with other parts of the company, thereby leading to the
risk of collusion to override financial statements.
f) Failure to conduct regular audits will easily generate risks to the control
environment, failing to achieve effectiveness and efficiency. Beside that, previous
evaluation results over time will no longer be accurate. Conduct quarterly
performance evaluations to ensure there are no weaknesses in internal control.
g) Management commitment to integrity and ethical values can be questioned when
trying to hide declining turnover. An audit is required to ensure fraud risks in
GoGo
h) It is necessary to complete the typed as well as online regulations so that it is easily
accessible to all employees. Besides, it needs regular updates and reviews to keep
up with new governance trends.
i) Although the internal control system is considered to be effective. But no matter
how good the internal control system is, it can still be overridden. We need to do
monthly tests
j) The inconsistency between management's handling methods and company policy
is largely due to inconsistency in the proper division of responsibilities. A manager
can hold more than his actual duties. GoGo needs to rebuild the company's rules
on proper division of responsibilities for specific departments and positions. If
necessary, additional positions may be appointed to achieve efficiency in the
control environment.
k) This does not seem to be a problem. It still achieved its objectives.
l) Managers are putting pressure on employees without considering their
competence. This will lead to failure to set the manager's target, causing
unnecessary losses to GoGo.
m) Go Go Company violated the Control environment principle of separation of
powers and responsibilities. Company managers need to ensure employees
understand the responsibilities and authorities of each department and individual
on the job and need to communicate this to their employees using job descriptions
and training. staff, operating schedule.
n) The fact that GoGo's low-risk appetite doesn't violate any rules, this is not a
problem to consider.
o) The fact that managers accept gifts from major suppliers and publicize them will
adversely impact employees as well as GoGo's reputation.Integrity and
commitment to ethical values and competence should be followed by managers to
set an example for employees.

P10.4
a) List four possibly unsatisfactory pairings of the functions
Pair 1:
 Authorize purchase order (Xet duyet)
 Maintain vendor records (Ghi nhan)
Pair 2:
 Maintain accounts payable ledger (Ghi nhan)
 Authorize cash disbursement (Xet duyet)
Pair 3:
 Handle inventory received (Bao ve tai san)
 Authorize cash disbursement (Xet duyet)
Pair 4:
 Maintain vendor payment terms (Ghi nhan)
 Approve vendor selection (Xet duyet)
b) State how you would distribute the functions among the three employees. Assume
that all functions require an equal amount of time to be completed
Employee 1: Approval functions
 Approve vendor selection
 Authorize purchase order
 Approve receiving report
Employee 2: Record functions:
 Maintain vendor record
 Maintain vendor payment term
 Maintain accounts payable ledger
Employee 3:
 Handle inventory received
 Authorize cash disbursement

P10.5
a) Expected loss before any new internal control procedures are implemented =
Impact x Likelihood = 1 million x 5% = 50,000
b) Expected loss (procedure A implemented) = Impact x Likelihood = 1 million x 2%
= 20,000
Expected loss (procedure B implemented) = Impact x Likelihood = 1 million x
1% = 10,000
Expected loss (procedure A and B implemented) = Impact x Likelihood = 1
million x 0.1% = 1,000
c) Estimated costs and benefits (procedure A) = (50,000 - 20,000) - 25,000 = 5,000
 Estimated costs and benefits (procedure B) = (50,000 - 10,000) - 30,000 = 10,000
Estimated costs and benefits (procedure A and B) = (50,000 - 1,000) - (25,000 +
30,000) = (6,000)
→ If consider only the estimates of cost and benefit, procedure B should be
implemented as it has the most net expected benefit.
d) Factors that might affect the decision are changes in price, firm size…
For example, ABC Corporation has high value, might be up to billions USD, so,
they have the ability to assess the risks based on the estimated costs and benefits,
therefore, the impact of 1 million potential loss may not affect the Going concern
assumption.