05 - Internal Controls

Question 1

What are internal controls?

Answer 1

Policies and procedures put into place to help and organisation to achieve its goals

Question 2

What is a control objective?

Answer 2

The aim of the control, what is it trying to prevent from happening?

Question 3

What is risk?

Answer 3

The conditions that expose the company to danger, what could go wrong?

Question 4

What is a control procedure?

Answer 4

The action taken to mitigate the risk that the company faces, what procedures can be put int place to protect the company?

Question 5

What are the four systematic weaknesses?

Answer 5

Lack of controls, poor implementation of controls, Lack of monitoring & Lack of leadership

Question 6

Describe the systematic weakness of the lack of controls

Answer 6

This is where the control never existed altogether, this could be due to the under-estimation of the risk or it being completely missed

Question 7

Describe the systematic weakness of poor implementation of controls

Answer 7

This is where there is a control that should work but doesn’t because it is not being followed properly, this could be internally or by accident

Question 8

Describe the systematic weakness of lack of monitoring

Answer 8

When a control has not been implemented or updated to keep inline with the current risks of the business as they have developed themselves

Question 9

Describe the systematic weakness of lack of leadership

Answer 9

When upper management don’t stress the importance of the controls of the business or are see to regularly disregard them, this can be see be other members of staff and so they do the same