A good understanding of internal controls is essential to auditors. This helps them to understand the business and allows them to effectively plan and execute tests of controls together with an appropriate level of substantive procedures. A small manufacturing company, Westfield, pays its staff in cash and by bank transfer, and the payroll department consists of a payroll clerk who maintains its payroll on a standalone laptop computer. The payroll clerk is supervised by the chief accountant, who in turn reports to the managing director. You are Westfield's auditor. Required(a) For the payroll department at Westfield, describe eight internal control objectives that should be in place. (b) Describe the internal control environment and internal control activities that should be in place to achieve the internal control objectives in (a)
A good understanding of internal controls is essential to auditors. This helps them to understand the business and allows them to effectively plan and execute tests of controls together with an appropriate level of substantive procedures.
A small manufacturing company, Westfield, pays its staff in cash and by bank transfer, and the payroll department consists of a payroll clerk who maintains its payroll on a standalone laptop computer. The payroll clerk is supervised by the chief accountant, who in turn reports to the managing director. You are Westfield's auditor.
Required
(a) For the payroll department at Westfield, describe eight internal control objectives that should be in place.
(b) Describe the internal control environment and internal control activities that should be in place to achieve the internal control objectives in (a)
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