ACCOUNTING

As an auditor, the ability to transcribe formalized or narrative processes into functional workflows allows you to identify potential gaps in accounting systems. These gaps can result in material audit findings necessitating changes in the company control structure.

For Milestone Two, prepare an analysis of Trinity Industries’ first year of Sarbanes–Oxley (SOX) complianceThe vice president (VP) and chief audit executive described the company as a likely candidate for a material weakness in the first year of SOX compliance. What were the elements critical to the company’s decisive success in its first year of compliance? Define a material weakness and explain the material weaknesses that are specific to Trinity. Describe the factors that made Trinity a success by illustrating the flow processes of the organization both in a narrative and process flowchart. This flowchart will be used to identify gaps and other threats to potential audit weaknesses.

Prompt: Formulate your processes into a comprehensive flowchart that will be used to identify gaps in processes and other threats to potential audit weaknesses.

Specifically, the following critical elements must be addressed:

II. First Year of SOX Compliance

a) The VP and chief audit executive described the company as a likely candidate for a material weakness in the first year of SOX compliance. What were the elements critical to the company’s decisive success in its first year of compliance?

b) What internal controls are important for preparing accurate and reliable financial reports? Support your response using both examples provided in the case study, as well as research into accounting standards (i.e., Public Company Accounting Oversight Board [PCAOB]).

c) Define, using support from accounting standards or other empirical evidence, what a material weakness is in terms of SOX compliance.

d) Assess, through reflection on the case study as well as the comparable industries identified in the overview, what material weaknesses are specific to Trinity.

e) Articulate standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance. Ensure that you demonstrate the requirements of SOX from inception in 2002.

f) Describe the factors that made Trinity successful by illustrating the flow processes of the organization both in a narrative and process flowchart.

Rubric

Guidelines for Submission: Your analysis must be submitted as a 2–3-page Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format.

Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions.

Critical Elements Proficient (100%) Needs Improvement (75%) Not Evident (0%) Value
First Year of SOX Compliance:Success Accurately determines elements critical to the company’s success in its first year of compliance Determines elements critical to the company’s success in its first year of compliance but determination contains inaccuracies Does not determine elements critical to the company’s success in its first year of compliance 16
First Year of SOX

ComplianceInternal Controls

Discusses which internal controls are important for preparing financial reports and supports response with examples from the case study and research into PCAOB Discusses which internal controls are important for preparing financial reports and supports response with examples from the case study and research into PCAOB but support is weak or illogical or does not use further research Does not discuss which internal controls are important for preparing financial reports 16
First Year of SOX

Compliance:Material Weakness

Defines what a material weakness is in terms of SOX compliance using support from accounting standards or other empirical evidence Defines what a material weakness is in terms of SOX compliance using support from accounting standards or other empirical evidence but support is weak Does not define what a material weakness is in terms of SOX compliance using support 16
First Year of SOX Compliance:Specific Assesses which material weaknesses are specific to the company through a reflection on the case study and comparable industries identified in the overview Assesses which material weaknesses are specific to the company through a reflection on the case study and comparable industries identified in the overview but assessment is cursory or contains inaccuracies Does not assess which material

weaknesses are specific to the

company

16
First Year of SOX

Compliance:PCAOB

Articulates standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance and ensures demonstration of the

requirements of SOX from inception in 2002

Articulates standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance but does not ensure demonstration of the requirements of SOX from inception in 2002 Does not articulate standards addressed in PCAOB regarding the concept of material weaknesses in development of internal control compliance 16
First Year of SOX ComplianceFactors Describes the factors that made Trinity successful by illustrating the flow processes of the organization both in a narrative and process flowchart Describes the factors that made Trinity successful by illustrating the flow processes of the organization both in a narrative and process flowchart but one or both lack detail or contain inaccuracies Does not describe the factors that made Trinity successful 16
Articulation of Response Submission has no major errors related to citations, grammar, spelling, syntax, or organization Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas 4
Earned Total 100%

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