Auditing And Assurance Services
Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 11, Problem 23DQP
To determine

Indicate which of the five COSO internal control components is best represented by each internal control.

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The accounting clerk for the Ram System company receives source documents such as purchase orders, sales invoices, and vendor invoices, which she uses to prepare journal vouchers to the general ledger for general ledger entries. Each day the clerk posts the journal vouchers to the general ledger and the related subsidiary ledgers. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. Required: Discuss any control weaknesses and risks associated with this scenario.
Vendor account reconciliations are performed by three clerks in the accounts payabledepartment on Friday of each week. The accounts payable supervisor reviews thecompleted reconciliations the following Monday to ensure they have been completed.The work performed by the supervisor is an example of which COSO component?(1) Control activities (3) Risk assessment(2) Information and communication (4) Monitoring
Following are descriptions of 10 internal controls. The company has an organizational chart that establishes the formal lines of reporting and authorization protocols. Before a cash disbursement can be processed, all payee information must be verified by matching the payee to the company’s approved vendor listing. The company’s computer systems track individual transactions and automatically accumulate transactions to create a trial balance. On a monthly basis, department heads compare a budget to actual performance report and investigate unusual differences. The company must receive university transcripts documenting all college degrees earned before an individual can begin employment with the company. Senior management obtains data about external events that might affect the entity and evaluates the impact of that information on its existing accounting processes. Each quarter, department managers are required to perform a self-assessment of the department’s compliance…
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