- 15 Marks
AA – May 2016 – L2 – Q6 – Internal Control Systems
Identify control activities in a trade payables system and the need for substantive procedures.
Question
Control activities may be defined as policies, procedures, and operations that help to enable management directives to be carried out. These activities are detailed procedures designed to prevent, or to detect and correct errors that may arise in processing information.
Required:
a. Set out the five types of control activities and illustrate each one in the context of purchases or trade payables system. (10 Marks)
b. Explain why, even where tests of controls prove satisfactory, substantive procedures can never be completely eliminated. (5 Marks)
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