Assume
that you applied for a position in UPC’s internal audit department after 5
years in the finance department. As a senior internal auditor, one of your
assignments is to design and implement controls over capital budgets and review
control effectiveness. Your company is required by the Sarbanes Oxley Act of
2002 (SOX) to report material weaknesses in internal controls.

You
created the attached spreadsheet to verify the growth rate used in calculating
cost of capital. You identified many inconsistencies with the data used by the
finance department. The discrepancies led to a higher cost of capital for the
truck replacement project. Therefore, UPC decided to lease trucks instead.
Further, you are aware that the finance director is the one who approves
capital projects and makes procurement and leasing decisions. The finance
director owns a truck leasing company, and proposals have been received from
his leasing company.

Your
have been instructed to respond to the following tasks:

• Identify and
  explain 5 or more audit objectives for UPC’s capital plans.
• Provide a report
  of your audit, and discuss any SOX reportable issues.
• Recommend
  internal controls to address identified and perceived control weakness in
  UPC capital plans.
• Some managers
  have complained that the process of accepting projects does not consider
  qualitative factors. What qualitative factors will you recommend? Are
  there any associated risks?

Attachments:

Copy-of-13723….xlsx