Internal Controls Flashcards
1
Q
What is the purpose of an entity’s system of internal control?
A
- Reliability of financial reporting
- Effectiveness and efficiency of operations
- Compliance with applicable laws and regulations
2
Q
What are the five components of the internal control framework?
A
- Monitoring
- Information & Communication
- Control Activities
- Risk Assessment
- Control Environment
3
Q
What does ISA 315 require of us in relation to internal controls?
A
Regardless of whether we plan to rely on internal controls as part of the audit strategy, we understand and evaluate the design and implementation of certain controls such as those that address a risk that is determined to be a significant risk and controls over journal entries.
4
Q
Define ‘control environment’.
A
Sets the “tone” of the organisation. It is the foundation for all other components (in the ICF) and has a pervasive effect on all control components.
5
Q
What are three levels of internal control reliance?
A
- None
- Partial
- High
