Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management. The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

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Answer 1

Question

Chapter 6, Problem 6.26P

a

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management.

The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

b

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives, the environment in which internal control operates has an impact on its effectiveness, the internal control environment is affected by, organizational structure, management supervision, and human resource management.

The interest of auditor in each of the control environment factors discussed in part a.

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Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose’s control environment. Required: a. Identify additional control environment factors (excluding the factors illustrated in the following example) that set the tone of an organization, influencing the control consciousness of its people. b. For each control environment factor identified in part (a), describe the components and why each component would be of interest to the auditor. Use the following format: Integrity and Ethical Values The effectiveness of controls cannot rise above the integrity and ethical values of the people who create, administer, and monitor them, Integrity and ethical values are essential elements of the control environment, affecting the design, administration, and monitoring of other components. Integrity and ethical behavior are the products of the entity's…

Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose's control environment. Required: a. Identify principles of internal control (in addition to the factors illustrated in the following example) that set the tone of an organization, influencing the control consciousness of its people. b. For each control environment factor identified in part (a), describe the components and why each component would be of interest to the auditor. Use the following format: Integrity and Ethical Values The effectiveness of controls cannot rise above the integrity and ethical values of the people who create, administer, and monitor them. Integrity and ethical values are essential elements of the control environment, affecting the design, administration, and and behavioral standards, monitoring of other components. Integrity and ethical behavior are the products…

Match each of the following components of internal control with its description. Components of Internal Control Descriptions 1. Control environment 2. Risk assessment 3. Control activities 4. Information and communication 5. Monitoring a. Procedures for maintaining separation ofduties.b. Routine activities that are meant tocontinually observe internal controlactivities.c. Transfer of data from lower managersto top executives for accurate financialreporting.d. Formal policies to evaluate internal andexternal threats to achieving companyobjectives.e. Overall attitude of the company withrespect to internal controls.

Answer 2

Question

Chapter 6, Problem 6.26P

a

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management.

The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

b

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives, the environment in which internal control operates has an impact on its effectiveness, the internal control environment is affected by, organizational structure, management supervision, and human resource management.

The interest of auditor in each of the control environment factors discussed in part a.

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Answer 3

Question

Chapter 6, Problem 6.26P

a

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management.

The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

b

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives, the environment in which internal control operates has an impact on its effectiveness, the internal control environment is affected by, organizational structure, management supervision, and human resource management.

The interest of auditor in each of the control environment factors discussed in part a.

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Answer 4

Question

Chapter 6, Problem 6.26P

a

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management.

The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

b

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives, the environment in which internal control operates has an impact on its effectiveness, the internal control environment is affected by, organizational structure, management supervision, and human resource management.

The interest of auditor in each of the control environment factors discussed in part a.

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Answer 5

Chapter 6, Problem 6.26P

a

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management.

The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

b

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives, the environment in which internal control operates has an impact on its effectiveness, the internal control environment is affected by, organizational structure, management supervision, and human resource management.

The interest of auditor in each of the control environment factors discussed in part a.

Answer 6

Chapter 6, Problem 6.26P

a

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management.

The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

Answer 7

Chapter 6, Problem 6.26P

a

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives. The environment in which internal control operates has an impact on its effectiveness. The internal control environment is affected by organizational structure, management supervision, and human resource management.

The additional control environmental factors that set the tone of an organization, influencing the control consciousness of its people.

Answer 8

b

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives, the environment in which internal control operates has an impact on its effectiveness, the internal control environment is affected by, organizational structure, management supervision, and human resource management.

The interest of auditor in each of the control environment factors discussed in part a.

Answer 9

b

To determine

Introduction:

Components of internal control: The system of internal control is the procedure adopted by the management of an entity to assist in achieving management’s objectives, the environment in which internal control operates has an impact on its effectiveness, the internal control environment is affected by, organizational structure, management supervision, and human resource management.

The interest of auditor in each of the control environment factors discussed in part a.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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

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