Six objectives, then fourteen risks rated and flagged for fraud and change, fill the AC557 Unit 2 objectives and risks worksheet for a three-yard scrap buyer. Searches like "ac 557 unit 2 assignment example", "ac557 unit 2 sample" and "ac557 unit 2 example" land here.
What a finished AC557 Unit 2 objectives and risks worksheet looks like
A two-part worksheet of five pages. Part one lists six objectives for scrap purchasing in COSO's three categories: one operations objective, pay the posted price for the grade and weight actually received; four reporting objectives, each tied to an assertion, occurrence, completeness, accuracy with cutoff, and inventory valuation at the lower of cost and net realizable value; and one compliance objective covering seller identification under the state's dealer rules. Part two lists fourteen risks beneath the objectives they threaten, each stated as an event: a grader assigning bare bright copper to a load of number two, a ticket paid for metal never unloaded. Columns rate likelihood and magnitude before any control, flag fraud risks with the condition behind them, and mark three risks arising from the acquisition.
How a AC557 Unit 2 example is structured
Objectives come first and are written tightly enough that a failure could be recognized, which is what principle 6 asks: pay the right price becomes pay the posted grade price, on net weight, for material recorded at the scale. Reporting objectives are tied to assertions because the parent's assessment is organized that way. Each risk sits under the objective it threatens, never in a free-standing list, so an orphan risk would be visible at once. Ratings are inherent, before controls, since the matrix in the next unit needs to see exposure unmitigated. Fraud risks carry the condition that makes them plausible, such as a grader paid partly on volume, in line with principle 8. Principle 9 supplies the change column: a new kiosk vendor, the parent's ERP interface and the founder's altered role.
Six objectives, three categories
One operations, four reporting and one compliance, each specific enough that someone could say whether a given ticket met it or failed it.
Assertions behind the reporting four
Occurrence, completeness, accuracy with cutoff, and valuation at the lower of cost and net realizable value, matching how the parent organizes its assessment.
Fourteen risks, each an event
A grade upgraded at the scale, a passenger aboard at weigh-in who steps off before the tare, a ticket for metal never unloaded, a December load recorded in January.
Inherent ratings only
Likelihood and magnitude scored high, medium or low before any control, so the design matrix meets the exposure unsoftened.
Fraud and change, flagged
Five risks carry a fraud flag with its enabling condition; three arise from the acquisition, including the founder's new role and the switch of kiosk vendor.
Where marks go in AC557 Unit 2
A worksheet opening on controls, or on risks with no objective above them, misses the order the unit is built around, and most graders read the first page for exactly that. Objectives written loosely, accuracy of purchasing for instance, cannot be failed and therefore cannot organize anything below them. Risks phrased as missing controls, no review of overrides, put the answer inside the question and draw comments. Ratings that already assume controls hide exposure the next unit needs. Fraud considered in general terms, without the condition making it plausible at this company, earns little under principle 8. Change risk is the section most often left out, and at an acquired business that omission is conspicuous. Assertions misapplied, cutoff treated as completeness, cost precision marks.
Get a AC557 Unit 2 example written to your instructions
Upload the case from Unit 2, or just its purchasing or sales cycle in brief, together with the rubric. Objectives in the categories your section uses come first in the custom worksheet, then risks stated as events and rated before controls. It is ready inside 24-48h, with no fee on a first worksheet.
AC557 Unit 2 questions, answered
Why must objectives come before risks?
Because a risk exists only relative to something it could prevent. Without a stated objective, a risk list becomes a catalog of unpleasant events with no way to rank them. The sample writes six objectives first, and every risk sits beneath the one it threatens, which also shows at a glance whether any objective has been left unprotected.
How does inherent risk differ from residual risk here?
Inherent risk is the exposure before controls; residual risk is what remains after them. The worksheet rates inherent risk only, because the control design matrix that follows needs to see exposure in full. Rating residual risk now would assume controls not yet designed or tested, a circularity graders tend to notice quickly.
Should compliance objectives appear in a financial reporting worksheet?
When the prompt covers all three COSO categories, yes, and many AC557 prompts do. The seller identification objective here is compliance, not reporting, and the worksheet says so, noting that its controls sit outside the parent's financial reporting assessment even though Rookwood still has to meet the rule every day.