I’m working on a accounting discussion question and need an explanation and answer to help me learn.
Detecting red flags is important because effective internal controls should provide for a specific approach for monitoring financial statements (and the base transactions below the consolidated statements) on an ongoing basis. Discuss the following:
You are the controller of a global business unit of a major corporation. This business unit is comprised of 15 manufacturing plants globally, which roll up into consolidated business unit financials of which you are responsible. As a result, you are tasked with monitoring the financial results of the entire business unit, which entails ensuring that there are no fraudulent activities rolling up through your financial statements.
How would you design your monitoring system to handle this responsibility?
What specific steps would you put in place to manage the global financial statements?
If you notice potentially questionable activity in one of your plants, how would you react? What would you do to investigate and address the issue?
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