You are an accountant at a CPA firm that is auditing the accounting records of Y
ID: 2732989 • Letter: Y
Question
You are an accountant at a CPA firm that is auditing the accounting records of YYZ Company. You have been tasked along with the accounting department to identify the limitations of the internal control system. During the audit, you identified that because of a weak internal control system, an adjusting entry was not recorded. Identify any limitations of the current internal control system. Recommend internal control procedures that should be implemented. Explain the impact of the missing journal entry on the financial statements.
Explanation / Answer
The limitation of Internal Control system is that the job is not properly segregated. There is no particular person who can account for the he has done.
One should be responsible for doing one thing. There should be properly management system. The work of one should be checked by the other person on routine basis.
The impact of the missing journal entry would be on the financial statements. It will not show the true and fair view of the financial statements that can lead to misthinking about the company.
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