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2 pages/β‰ˆ550 words
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Accounting, Finance, SPSS
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Case Study
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English (U.S.)
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Audit Report on Internal Controls and Penalties

Case Study Instructions:

Overview
In the United States, the management and auditors of publicly held companies must evaluate their internal controls annually. The purpose of the evaluation is to look for any control deficiencies. Doing so will help avoid any penalties such as the $10.5 million that the SEC imposed on Citigroup Inc. as a result of its internal controls failures. See the article from SEC.gov, Citigroup to Pay More Than $10 Million for Books and Records Violations and Inadequate Controls.
You are an external auditor hired by Citigroup to perform an audit. You will be reporting to Citigroup’s audit committee.
Instructions
Write a 2–3 page report for the audit committee in which you:
Critique Citigroup’s internal controls and the purpose they serve.
Distinguish between operation and design control deficiency.
Determine the reasons that led Citigroup Inc. to pay $10.5 million in penalties.
Recommend techniques that will overcome the weaknesses of Citigroup’s internal controls; justify the recommendation.
Use three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment. For help with research, writing, and citation, access the library, or review library guides.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

Case Study Sample Content Preview:

Audit Report on Internal Controls and Penalties
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Audit Report on Internal Controls and Penalties
A press release by The Securities and Exchange Commission announces that Citibank was imposed with a US$ 10.5 million for lack of adequate controls and book violations (SEC, 2018). To avoid future violations, Citibank must analyze its internal controls to identify and address existing deficiencies. This report provides an external auditor’s analysis of the violations that resulted in the fine and discusses recommendations that the company should implement to address the weakness and enhance the control environment.
Citibank’s Internal Controls
Internal controls are crucial for an organization as they serve to protect the organization and allow it to minimize the risks associated with the execution of strategic objectives. To this end, properly executed internal controls lower the risks that an organization face and protect the assets of an organization by making sure that the various operations within the organization adhere to existing rules and regulation. Therefore, internal control should be designed in such a way that they can detect fraud and eliminate irregularities during operations such as financial reporting (Arens, Elder, & Beasley, 2017). Given that Citibank was fined US$ 10.5 million, it is evident that the internal controls in place at the organization are not minimizing risks for the company. The recent penalties highlight the inadequacy of the company’s internal controls and the associated risks.
Notably, the deficiencies in internal control can either result from the design or the operation of the internal control failing to detect a potential misstatement of records of materials on time. Design control deficiency occurs when a given control is absent or improperly configured to facilitate the detection or prevention of irregularities in a timely fashion (Arens, Elder, & Beasley, 2017). On the other hand, operational control deficiency occurs when a properly designed control does not operate as intende...
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