Limitation of Systems of Internal Control

Question 1

What happens even with best system of internal control?

Answer 1

There is no guarantee that an etity will be able to fulfil all objectives and be free from fraud and error

Question 2

Inherent limitation of internal control systems (H)

Answer 2

Human error

Question 3

Inherent limitation of internal control systems (C)

Answer 3

Cost of control > benefit

Question 4

Inherent limitation of internal control systems (u)

Answer 4

Unforeseen circumstances where no control exists

Question 5

Inherent limitation of internal control systems (M)

Answer 5

Management override of controls

Question 6

Inherent limitation of internal control systems (D)

Answer 6

Deliberate circumvention of processes by employees

Question 7

WHat do the inherent limitations of internal control systems mean?

Answer 7

An auditor cannoy rely solely on audit evidence from tests of controls, they always need to conduct some substantive procedures