Product Recall, Internal Control Deficiencies And Subsequent Events Audit

In recent years as people strengthened their legal consciousness and security guaranteeconsciousness, some products recalls will often appear in both home and abroad, increasingproducts have been recalled subsequently not only in car industry, but also in food industryand cosmetics industry, these events not only caused debate and concern on recalledproducts, but also many reality problems on how to process recalled products. Recall has asmall occurring probability, before it happens, it is hard to estimate and foresee the scopeand amount possibly affected, but once recalled, the loss it generates to the manufacturers isincalculable, with substantial amount and impact. Product recalls ultimately derive from theunreliability of the manufacturers to produce products to meet consumer demand. Recallenterprises should shoulder the main responsibility for the incident, the occurring of recallsindicates that the internal management systems and controls are not sound and deficient.Facing new situations and tasks, provincial audit organs of all levels should further enhanceoverall consciousness and responsibility consciousness, as an external force with oversightfunctions, auditing is inextricably linked with enterprise development, due to thecomplexity of subsequent events accounting process, and the effect the event itself has onenterprise, this also provides certain space and possibilities for enterprise fraud. As aneffective monitoring way, auditing plays an important role in practicing science auditconcept, promoting healthy and benign enterprise run, risk indicating, investigating illegalviolation cases, improving its oversight effectiveness, guaranteeing the "immune system"features and public finance "defender" which safeguard the healthy run of economic society,therefore for product recall accounting processing, audit oversight is critical, it is both agood mean and arm to guarantee the healthy and benign running of enterprise finance. Thisarticle first describes products recall system principles and the causes of recall system implementation,then analyses the management defects and the system vulnerability within the product recall enterprise,finally analyses the influences on accounting process and auditing of enterprises, and makescountermeasures recommendations for this event. I found internal control deficiencies can easily lead to product recalls, and audit opinions will be negatively affected by weak internal control, and as the hub ofthe relationship of three, internal control needs managers’ extreme attaches.