Dickinson Technologies, Inc.: Lack of Internal Control Structure

This report deals with an external audit of Dickinson Technologies, Inc. Dickinson Technologies Inc. is an international manufacturer of instruments, with manufacturing operations both inside and outside of the United States. Dickinson Technologies, Inc. has a net income which has increased each year, from $3.8 million seven years ago, to a projected $15.6 million in the current fiscal year. (Agoglia, Brown and Hanno, 2003) The audit revealed that Dickinson Technologies, Inc does not have strong internal controls as required by the AICPA (AU Section 316) and Sarbanes-Oxley Act of 2002. Furthermore, the corporate culture of Dickinson Technologies, Inc. does not foster a …show more content…
Responsibility and delegation of authority are assigned in a formal, written manner. Job descriptions are specific and detail-oriented. Non-managerial employees seem to understand their role as well, and it appears to be properly communicated. Any deviation from established policies and procedures will lead to bad performance reviews and/or termination. All employees must sign a Code of Conduct upon hiring (required by Section 406 of the Sarbanes-Oxley Act of 2002 for management and its boards of directors, and by the SEC for all employees of public companies), however, there is no reference in the questionnaire of a periodic acknowledgment from employees to ensure compliance with all company regulations. Although this area could represent something management actually does very well, it does have its shortcomings. According to Albrecht, 5 ed., it is helpful to have employees read and sign their code of conduct on an annual basis. Management does not seem to submit reviews of Dickinson Technologies, Inc. various processes. Due to this lack of oversight, it is not clear that the defined responsibilities are actually being adhered to by the employees. Additionally, management does not appear to make any formal periodic assessment of the organizational structure. There are no specific actions formalized from the Board members to the management staff regarding adherence to