Internal Controls And Internal Control

1884 Words Nov 6th, 2014 8 Pages
Introduction 1
Analysis of the internal controls 1
Conclusion 4

Internal control is the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. The term “controls” refers to any aspects of one or more of the components of internal control. (Ifac, 2010, p. 264)
ISA 315 requires the auditor to identify and assess the risks of material misstatement, whether due to fraud or error, at the financial statement and assertion levels, through understanding the entity and its environment, including the entity’s internal control, thereby providing a basis for designing and implementing responses to the assessed risks of material misstatement. (Ifac, 2010, p. 264)
Analysis of the internal controls
Internal Control Weakness Implication Recommendations
There is ineffective oversight of the entity’s staff hiring. The hiring of Mr Newman and Mr Bishop has been done on a personal favour basis rather than on a professional basis. This has led to hiring of incompetent staff who do not seem to have the company’s best interest in mind. For example Mr Newman has been allowed to take up a part-time position yet it’s clearly a fulltime position. This would mean that he is focusing his…

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