Analysis and Recommendations for Strengthening Internal Control Systems: A Case Study on XYZ and PRG Companies

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Last Name1Analysis and Recommendations for Strengthening Internal Control Systems:A Case Study on XYZ and PRG CompaniesIdentify and analyze the key deficiencies in the internal control systems at XYZ Company asnoted in the audit report. Based on thesedeficiencies, recommend modifications to improve thecompany's internal control processes. In your response, also discuss the audit procedures andassertions related to inventory, long-term debt, and accounts receivable. Provide relevantexamples and explain how the audit findings relate to improving overall financial reporting andpreventing fraud. Support your answer with at least three references to academic sources. (Wordcount: 1,500–2,000 words)

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Last Name2Student’s NameProfessorCourseDateAuditing1.Five main deficiencies were identified during the audit process in the company. Thedeficiencies describe the situations that do not allow the management or employees to performtheir assigned functions, to prevent or detect misstatements.The first deficiency is that themanagement report on internal control over financial reporting was not prepared and maintainedbased on the internal control frameworks. This affects the validity and credibility of the auditreports considering that it may be questionable and its reliability. It is important that the internalcontrols should comply with the already set regulations and rules.Secondly, the XYZ Company had not maintained an effective internal control overfinancial reporting. This made difficult for the company to evaluate the management’s progressand efficiency. I think that the failure toimplement effective internal controls adversely affectsthe nature and level of financial reporting in the organization(Pitt 78).Thethird deficiency wasthat the company did not undertake adequate segregation of duties within its significant accountand process. Inadequate segregation questions the nature and value of independence and

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