Internal Control Summary

Question 1

First control?

Answer 1

Sales

Question 2

Second control?

Answer 2

Purchase

Question 3

Third control?

Answer 3

Inventory

Question 4

Fourth control?

Answer 4

Payroll

Question 5

Fifth control?

Answer 5

Non-current assets

Question 6

Sixth control?

Answer 6

Bank and Cash

Question 7

Identify deficiency (segragation)

Answer 7

Weak segragation duties

Question 8

Identify deficiency (seniority)

Answer 8

Seniority of staff member

Question 9

Identify deficiency (authorisation)

Answer 9

No authorisation

Question 10

Identify deficiency (review)

Answer 10

No review of work

Question 11

Identify deficiency (autom)

Answer 11

Automation vs manual

Question 12

Identify deficiency (look no)

Answer 12

Look for no/not in the question

Question 13

Identify deficiency (doc)

Answer 13

Documentational issue

Question 14

Recommendation (repeat)

Answer 14

Don’t repeat

Question 15

Recommendation (value)

Answer 15

Add value

Question 16

Recommendation (who perform)

Answer 16

Who should perform the activity

Question 17

Recommendation (when perform)

Answer 17

When it should be performed

Question 18

Recommendation (frequency)

Answer 18

Frequency?

Question 19

Recommendation (specific)

Answer 19

Be specific

Question 20

What is meant by key control?

Answer 20

What management have taken to reduce fraud and error

Question 21

Keywords to explain key control?

Answer 21

Minimises/reduces the risk of

This ensures that

Question 22

Explain deficiency (sales)

Answer 22

Loss of future sales

Question 23

Explain deficiency (customer)

Answer 23

Loss of custoemr goodwill

Question 24

Explain deficiency (cash)

Answer 24

Cash flow problems

Question 25

Explain deficiency (cost)

Answer 25

Increase in cost

Question 26

Explain deficiency (result)

Answer 26

This could result in

Question 27

Explain deficiency (risk)

Answer 27

There is a risk that

Question 28

Test of control (enquire)

Answer 28

Enquire with management

Question 29

Test of control (observe)

Answer 29

Observe the process/activity

Question 30

Test of control (Reperform)

Answer 30

Reperform the test data

Question 31

Test of control (inspect)

Answer 31

Inspect documents

Question 32

Difference between internal controls and substantive procedures (anal)

Answer 32

Analytical procedures isn't included in test of controls

Question 33

Who carries out tests of control?

Answer 33

Auditor

Question 34

What is meant by a direct control?

Answer 34

Whether the control as described has been appropriately designed and is being operated in such a way that it would prevent or detect a material misstatement.

Question 35

What should a tests of control explain?

Answer 35

Detail must be given on specifically what is being done to achieve a check

Question 36

What should a control deficiency explain?

Answer 36

A clear understanding of how the deficiency will result in fraud and error is needed