For each risk listed in the preceding problem, suggest one or more internal controls Extreme Canines could institute. Classify each control as preventive, detective, or corrective in nature.
The Vermont Teddy Bear Company ( www.vtbear.com) works with customers to design custom teddy bears. The bears are individually built and assembled in Vermont, and then are sent out to gift recipients all over the world. The company’s mission is “to make the world a better place—one Bear at a time.” Consult the company’s Web site for information about its operations, philosophy, and history. Then respond to each of the following requirements as directed by your instructor:
a. Conduct a comprehensive risk assessment using the COSO Internal Control: Integrated Framework. Your output could be a PowerPoint presentation, a written report, a Web page, or some other form. Consider the following questions as a guide:
i. How would you describe the control environment at VTB?
ii. What risks does the company face?
iii. What control activities would you advise to mitigate the risks?
iv. How does VTB management communicate with its employees, stockholders, and the public? What additional communication tools would you recommend?
v. How has VTB responded to the Sarbanes-Oxley requirements for internal control monitoring? vi. Overall, does VTB have a sound, comprehensive internal control structure?
b. Conduct a similar analysis for Net Flix, an online DVD rental service. You can fi nd information about Net Flix at www.netfl ix.com .