Assume that you applied for a position in UPC’s (fictitious firm) 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: