4. Internal Control

Question 1

4. What is the difference between entity level controls and process level controls?

Answer 1

Entity - operate at a financial statement level and support the effective functioning of the process level controls
Process - operate at an individual process level that address specific risks and assertions

Question 2

4. What are the 5 components of an entity’s internal control?

Answer 2

1. Control environment.
2. Risk assessment process.
3. Information system, including the related business processes relevant to financial reporting and communication.
4. Control activities.
5. Monitoring of controls.
   In practice, these five components of internal control prescribed by ISA 315 (Revised) are not always clearly defined and distinct from each other.