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• Management has to ensure that the benefits expected from an internal. control system
outweigh the costs. As a result certain important controls might not be put in place due
to the costs involved. c.1,. a small entity might not have the resources to employ
sufficient staff to ensure proper segregation of duties.
• Most internal controls tend to be directed towards routine transactions rather than nonroutine
transactions. This leaves gaps that can be exploited.
• Human error due to carelessness, distraction, mistakes of judgement and
misunderstanding instructions could undermine the internal control system.
• Controls could be circumvented through collusion by a member of management or an
employee with persons outside or inside the entity.
• Abuse of responsibility e.g. a member of management overriding an internal control
• The possibility that procedures maybe inadequate due to changes in conditions.
Kavungya answered the question on May 14, 2019 at 13:12
- The risk of fraud in the sales systems of XYZ Ltd. has been assessed as higher than normal.
Briefly describe how the assessment would influence your...(Solved)
The risk of fraud in the sales systems of XYZ Ltd. has been assessed as higher than normal.
Briefly describe how the assessment would influence your work as an external auditor of XYZ
Ltd.
Date posted: May 14, 2019. Answers (1)
- Describe the audit procedures you would carry out when auditing a charity organisations:
i) Cash donations
ii) Non-cash donations(Solved)
Describe the audit procedures you would carry out when auditing a charity organisations:
i) Cash donations
ii) Non-cash donations
Date posted: May 14, 2019. Answers (1)
- The auditor has a duty to certify the amount of stock in the financial statement.
Outline the auditor's duties before stocktaking in a manufacturing enterprise.(Solved)
The auditor has a duty to certify the amount of stock in the financial statement.
Outline the auditor's duties before stocktaking in a manufacturing enterprise.
Date posted: May 14, 2019. Answers (1)
- Highlight seven limitations of an internal control system in an organisation.(Solved)
Highlight seven limitations of an internal control system in an organisation.
Date posted: May 14, 2019. Answers (1)
- a) Explain the effectiveness of the following controls in preventing fraud in an organisation
i. Segregation of duties.
ii. Physical controls.
b) Outline a suitable internal control system...(Solved)
a) Explain the effectiveness of the following controls in preventing fraud in an organisation
i. Segregation of duties.
ii. Physical controls.
b) Outline a suitable internal control system for wage payments
Date posted: May 14, 2019. Answers (1)
- Summarise four measures that a company could put in place for safeguarding its cash
balances(Solved)
Summarise four measures that a company could put in place for safeguarding its cash
balances
Date posted: May 14, 2019. Answers (1)
- State five controls of fixed assets in an organisation.(Solved)
State five controls of fixed assets in an organisation.
Date posted: May 14, 2019. Answers (1)
- Describe three cut-off procedures the auditor would perform on inventory at the period end.
Assume that inventory is a material amount in the financial statements.(Solved)
Describe three cut-off procedures the auditor would perform on inventory at the period end.
Assume that inventory is a material amount in the financial statements.
Date posted: May 14, 2019. Answers (1)
- Explain how the establishment Fan internal audit functions in a large manufacturing company
might prevent perpetration of errors and frauds.(Solved)
Explain how the establishment Fan internal audit functions in a large manufacturing company
might prevent perpetration of errors and frauds.
Date posted: May 14, 2019. Answers (1)
- For each of the following assets, suggest seven internal control procedures that the owner of a
retail hardware shop should implement to minimize possible losses through...(Solved)
For each of the following assets, suggest seven internal control procedures that the owner of a
retail hardware shop should implement to minimize possible losses through errors and fraud;
i. Cash
ii. inventory
Date posted: May 14, 2019. Answers (1)
- Explain four characteristics of a small entity that make it difficult for the auditor to rely on the
entity's system of internal control(Solved)
Explain four characteristics of a small entity that make it difficult for the auditor to rely on the
entity's system of internal control
Date posted: May 14, 2019. Answers (1)
- Explain the internal controls necessary in each of the following areas:
(i) Sales.
(ii) Purchases.
(iii) Cash.(Solved)
Explain the internal controls necessary in each of the following areas:
(i) Sales.
(ii) Purchases.
(iii) Cash.
Date posted: May 14, 2019. Answers (1)
- a) Outline six matters that should be checked while vouching a sales invoice.
b) As the audit assistant in XYZ Ltd., identify six procedures that you...(Solved)
a) Outline six matters that should be checked while vouching a sales invoice.
b) As the audit assistant in XYZ Ltd., identify six procedures that you would carry out to
verify payments from petty cash.
c) Accounting and internal control systems cannot provide management with conclusive
evidence that objectives are reached because of their inherent limitations.
With reference to the above statement, discuss four inherent limitations of accounting and
internal control systems.
Date posted: May 14, 2019. Answers (1)
- (a) Describe five purposes of an internal control system.
(b) Explain five actions that an auditor should take if the internal control system is found to...(Solved)
(a) Describe five purposes of an internal control system.
(b) Explain five actions that an auditor should take if the internal control system is found to be
weak.
Date posted: May 14, 2019. Answers (1)
- a) Explain the matters that an auditor should consider during the planning stage °Ian audit
of a continuing client.
b) Define the following audit risks:
i. Inherent risk:
ii....(Solved)
a) Explain the matters that an auditor should consider during the planning stage °Ian audit
of a continuing client.
b) Define the following audit risks:
i. Inherent risk:
ii. Control risk.
c) Briefly describe the procedure an auditor could use to assess the risks in (b above in the
course of his audit of a company.
Date posted: May 14, 2019. Answers (1)
- Outline four challenges that an audit firm might face in planning an audit.(Solved)
Outline four challenges that an audit firm might face in planning an audit.
Date posted: May 14, 2019. Answers (1)
- Explain how the external auditor reduces audit time by relying on the work of the client's internal
audit function.(Solved)
Explain how the external auditor reduces audit time by relying on the work of the client's internal
audit function.
Date posted: May 14, 2019. Answers (1)
- Explain three reasons that could lead to the failure of an audit planning process.(Solved)
Explain three reasons that could lead to the failure of an audit planning process.
Date posted: May 14, 2019. Answers (1)
- Summarize six advantages of the business risk approach in auditing.(Solved)
Summarize six advantages of the business risk approach in auditing.
Date posted: May 14, 2019. Answers (1)
- Explain the importance of audit planning.(Solved)
Explain the importance of audit planning.
Date posted: May 14, 2019. Answers (1)