:. The study and evaluation of internal controls in Assignment 4 identified defi

Question

:. The study and evaluation of internal controls in Assignment 4 identified deficiencies in internal controls over acquisitions. Did any of these deficiencies result in misstatements in the recording of transactions? Explain why deficiencies in internal controls may not always result in significant misstatements in recording transactions. You performed tests of controls and substantive tests of transactions for acquisitions using nonstatistical sampling. The tests of controls and substantive tests of transactions for sales transactions were performed using statistical sampling. Indicate the significant differences in these approaches in planning the sample, performing the audit procedures, and evaluating the results of the sample. 4.

Explanation / Answer

An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements

Here is the list of indicators of control deficiencies that are regarded as indicators of material weaknesses in internal control:

Deficiencies in the Design of Controls

The following are examples of circumstances that may be deficiencies, significant deficiencies, or material weaknesses related to the design of controls.

Employees or management who lack the qualifications and training to fulfill their assigned functions. For example, in an entity that prepares financial statements in accordance with generally accepted accounting principles, the person responsible for the accounting and reporting function lacks the skills and knowledge to apply generally accepted accounting

Failures in the Operation of Internal Control

The following are examples of circumstances that may be deficiencies, significant deficiencies, or material weaknesses related to the operations of controls.

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