Internal Control Environment

• From Case 5, discuss the role of the audit committee and its responsibilities. Determine whether the responsibility to hire and fire audit managers should have prevented the firing of the chief of internal auditing by Microsoft management for reporting fraudulent activity. Support your position.

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• Compare the existing internal control environment at Microsoft to management’s responsibility for designing effective internal controls outlined in the textbook, and identify the deficiencies that existed. Speculate on what types of internal controls could have been designed to detect the accounting irregularities, and provide at least two reasons why the internal controls that were in place at Microsoft were not effective in detecting the accounting errors. Provide specific examples.

This is a discussion question that don’t have to be no more than a paragraph or two.