Identify and explain 5 or more audit objectives for UPC’s capital plans. Provide a report of your audit, and discuss any SOX reportable issues.

Assume that you applied for a position in UPC’s 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.

You have been instructed to respond to the following tasks:

  • Identify and explain 5 or more audit objectives for UPC’s capital plans.
  • Provide a report of your audit, and discuss any SOX reportable issues.
  • Recommend internal controls to address identified and perceived control weakness in UPC capital plans.
  • Some managers have complained that the process of accepting  projects does not consider qualitative factors. What qualitative factors  will you recommend? Are there any associated risks?
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