Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations. To describe: Internal Control and Auditor’s role in planning Internal Control

Question

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Answer 1

Question

Chapter 6, Problem 6.1RQ

To determine

Introduction:Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations.

To describe: Internal Control and Auditor’s role in planning Internal Control

Expert Solution & Answer

Explanation of Solution

Management in order to maintain effective internal control makes sure that following objectives are achieved:

Transactions are executed in accordance with management’s authorization.
All the transaction are recorded in correct accounts with appropriate amounts and in the accounting period in which it is executed
Preparation of Financial Statements in accordance with recognized accounting principles and policies and within relevant statutory requirements.
Assets are safeguarded from unauthorized access
The asset recorded should be compared with existing assets at reasonable intervals so as to investigate if any difference arises.

There are mainly five components of internal control to be checked/observed:

Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring of Controls

The auditor’s main concern with the internal control is to find out material weaknesses in the internal control i.e., whether any material weakness exists in the design, implementation or maintenance of internal control and auditor shall communicate such weakness in internal control identified during audit to management on timely basis and communicate with those charged with governance. The auditor’s concern in the internal control is a major factor in determining overall audit strategy.

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Answer 2

Question

Chapter 6, Problem 6.1RQ

To determine

Introduction:Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations.

To describe: Internal Control and Auditor’s role in planning Internal Control

Expert Solution & Answer

Explanation of Solution

Management in order to maintain effective internal control makes sure that following objectives are achieved:

Transactions are executed in accordance with management’s authorization.
All the transaction are recorded in correct accounts with appropriate amounts and in the accounting period in which it is executed
Preparation of Financial Statements in accordance with recognized accounting principles and policies and within relevant statutory requirements.
Assets are safeguarded from unauthorized access
The asset recorded should be compared with existing assets at reasonable intervals so as to investigate if any difference arises.

There are mainly five components of internal control to be checked/observed:

Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring of Controls

The auditor’s main concern with the internal control is to find out material weaknesses in the internal control i.e., whether any material weakness exists in the design, implementation or maintenance of internal control and auditor shall communicate such weakness in internal control identified during audit to management on timely basis and communicate with those charged with governance. The auditor’s concern in the internal control is a major factor in determining overall audit strategy.

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Answer 3

Question

Chapter 6, Problem 6.1RQ

To determine

Introduction:Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations.

To describe: Internal Control and Auditor’s role in planning Internal Control

Expert Solution & Answer

Explanation of Solution

Management in order to maintain effective internal control makes sure that following objectives are achieved:

Transactions are executed in accordance with management’s authorization.
All the transaction are recorded in correct accounts with appropriate amounts and in the accounting period in which it is executed
Preparation of Financial Statements in accordance with recognized accounting principles and policies and within relevant statutory requirements.
Assets are safeguarded from unauthorized access
The asset recorded should be compared with existing assets at reasonable intervals so as to investigate if any difference arises.

There are mainly five components of internal control to be checked/observed:

Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring of Controls

The auditor’s main concern with the internal control is to find out material weaknesses in the internal control i.e., whether any material weakness exists in the design, implementation or maintenance of internal control and auditor shall communicate such weakness in internal control identified during audit to management on timely basis and communicate with those charged with governance. The auditor’s concern in the internal control is a major factor in determining overall audit strategy.

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Answer 4

Question

Chapter 6, Problem 6.1RQ

To determine

Introduction:Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations.

To describe: Internal Control and Auditor’s role in planning Internal Control

Expert Solution & Answer

Explanation of Solution

Management in order to maintain effective internal control makes sure that following objectives are achieved:

Transactions are executed in accordance with management’s authorization.
All the transaction are recorded in correct accounts with appropriate amounts and in the accounting period in which it is executed
Preparation of Financial Statements in accordance with recognized accounting principles and policies and within relevant statutory requirements.
Assets are safeguarded from unauthorized access
The asset recorded should be compared with existing assets at reasonable intervals so as to investigate if any difference arises.

There are mainly five components of internal control to be checked/observed:

Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring of Controls

The auditor’s main concern with the internal control is to find out material weaknesses in the internal control i.e., whether any material weakness exists in the design, implementation or maintenance of internal control and auditor shall communicate such weakness in internal control identified during audit to management on timely basis and communicate with those charged with governance. The auditor’s concern in the internal control is a major factor in determining overall audit strategy.

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Answer 5

Chapter 6, Problem 6.1RQ

To determine

Introduction:Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations.

To describe: Internal Control and Auditor’s role in planning Internal Control

Expert Solution & Answer

Explanation of Solution

Management in order to maintain effective internal control makes sure that following objectives are achieved:

Transactions are executed in accordance with management’s authorization.
All the transaction are recorded in correct accounts with appropriate amounts and in the accounting period in which it is executed
Preparation of Financial Statements in accordance with recognized accounting principles and policies and within relevant statutory requirements.
Assets are safeguarded from unauthorized access
The asset recorded should be compared with existing assets at reasonable intervals so as to investigate if any difference arises.

There are mainly five components of internal control to be checked/observed:

Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring of Controls

The auditor’s main concern with the internal control is to find out material weaknesses in the internal control i.e., whether any material weakness exists in the design, implementation or maintenance of internal control and auditor shall communicate such weakness in internal control identified during audit to management on timely basis and communicate with those charged with governance. The auditor’s concern in the internal control is a major factor in determining overall audit strategy.

Answer 6

Chapter 6, Problem 6.1RQ

To determine

Introduction:Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations.

To describe: Internal Control and Auditor’s role in planning Internal Control

Expert Solution & Answer

Explanation of Solution

Management in order to maintain effective internal control makes sure that following objectives are achieved:

Transactions are executed in accordance with management’s authorization.
All the transaction are recorded in correct accounts with appropriate amounts and in the accounting period in which it is executed
Preparation of Financial Statements in accordance with recognized accounting principles and policies and within relevant statutory requirements.
Assets are safeguarded from unauthorized access
The asset recorded should be compared with existing assets at reasonable intervals so as to investigate if any difference arises.

There are mainly five components of internal control to be checked/observed:

Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring of Controls

The auditor’s main concern with the internal control is to find out material weaknesses in the internal control i.e., whether any material weakness exists in the design, implementation or maintenance of internal control and auditor shall communicate such weakness in internal control identified during audit to management on timely basis and communicate with those charged with governance. The auditor’s concern in the internal control is a major factor in determining overall audit strategy.

Answer 7

Chapter 6, Problem 6.1RQ

To determine

Introduction:Internal Control is defined as the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations safeguarding of assets and compliance with applicable laws and regulations.

To describe: Internal Control and Auditor’s role in planning Internal Control

Answer 8

Expert Solution & Answer

Explanation of Solution

Management in order to maintain effective internal control makes sure that following objectives are achieved:

Transactions are executed in accordance with management’s authorization.
All the transaction are recorded in correct accounts with appropriate amounts and in the accounting period in which it is executed
Preparation of Financial Statements in accordance with recognized accounting principles and policies and within relevant statutory requirements.
Assets are safeguarded from unauthorized access
The asset recorded should be compared with existing assets at reasonable intervals so as to investigate if any difference arises.

There are mainly five components of internal control to be checked/observed:

Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring of Controls

The auditor’s main concern with the internal control is to find out material weaknesses in the internal control i.e., whether any material weakness exists in the design, implementation or maintenance of internal control and auditor shall communicate such weakness in internal control identified during audit to management on timely basis and communicate with those charged with governance. The auditor’s concern in the internal control is a major factor in determining overall audit strategy.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 6 - Prob. 6.1RQ Ch. 6 - Prob. 6.2RQ Ch. 6 - Prob. 6.3RQ Ch. 6 - Prob. 6.4RQ Ch. 6 - Prob. 6.5RQ Ch. 6 - Prob. 6.6RQ Ch. 6 - Prob. 6.7RQ Ch. 6 - Prob. 6.8RQ Ch. 6 - Prob. 6.9RQ Ch. 6 - Prob. 6.10RQ

Explanation of Solution

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Chapter 6 Solutions