- 20 Marks
AA – Nov 2019 – L2 – Q4 – Internal Control Systems
Justify the effectiveness of internal control systems and discuss their characteristics, types, and components.
Question
During the review of the internal control activities of VIDA Plc., the Chairman of the Audit Committee stated in his concluding remarks that in any organization, we may conclude that an entity has an effective control environment if management is committed to accurate financial reporting with the support of an effective internal control system.
The control process assists the organization to embark on proper data analysis and information management that will enable the business and its employees to function effectively. Control focuses on activities before, during, and after daily operations to ensure safeguards and management of assets to enable the organization to achieve its aims and objectives. An effective and efficient system of internal control will give great returns to shareholders and ensure transparent financial reporting.
Required:
Justify the above statement by identifying and explaining:
- Characteristics of an effective internal control system (8 Marks)
- Different types of internal control systems (6 Marks)
- Main components of internal controls (6 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Effective Control Environment, Financial Reporting, Internal Control
- Level: Level 2
- Topic: Internal Control Systems
- Series: NOV 2019