Kirsten,
I was very intrigued by your mention of Internal control over financial reporting. Your
perspective led me to investigate the aspect of internal control as it pertains to CBU in the case
study. One component of internal controls that stands out in this case, is the way in which
information within the company is gathered and shared. The information is needed by both
people within the company responsible for financial reporting, and to external users of financial
reports (Gillan, 2006). CBU seems to have a bigger problem under this standard then just which
Accountant is correct. They have an internal control problem. The company does not have a
well-defined and working internal control over inventory that would allow them to find this
material difference early on. Having the correct information provides the leadership of the
company with proper financial statements. As you point out, management and investors cannot
make decisions without accurate data. In order to stay compliant with the Sarbanes-Oxley Act of
2002, a private company only has to assess internal controls annually (Mohr, 2016). To be
effective in their industry and transparent with their investors, CBU may want to consider
implementing more stringent internal controls sooner rather than later.