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Internal Control, Internal Control (Limitations/causes of failure (Not…
Internal Control
Internal Control
Limitations/causes of failure
Not updated
Unforeseen circumstances
Routine vs non-routine transactions
Controls bypassed or override
Collusion
Human error or fraud
Poor decision making
CvB
Importance
Maintaining investor confidence
Implementing strategy
Management of risks
Management of HR
Quality of internal reporting
Quality of external reporting
Purpose of control systems
Prevention/detection of fraud
Safeguarding assets
ensure compliance w/ laws & regulations
ensure quality of internal & external reporting
facilitate effective & efficient operation of a company
Challenges
Limited IT expertise inhouse
Insufficient time
Management override
Insufficient staff
Review of controls
Changes since last assessment of risks
Scope & quality of managements monitoring of risks
Extent & frequency of reports to board
Significant controls, failings & deficiencies
Frameworks
Purpose
Timely preparation of reliable f. info
Accuracy & completeness of acc records
Prevention/detection of fraud
Safeguarding assets
Adherence to internal policies & laws
Achieve orderly conduct of business
action taken by management to enhance the likelihood that objectives will be achieved
Feedback mechanisms important when analysing controls