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Seatwork AIS Answer

This document identifies 31 scenarios and asks to identify the component of internal control involved for each. It then identifies 20 additional scenarios and asks to identify the cardinal of internal controls for each. The scenarios cover a wide range of internal control activities across control environment, risk assessment, control activities, information and communication, and monitoring components.

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Mariel Taguba
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66 views

Seatwork AIS Answer

This document identifies 31 scenarios and asks to identify the component of internal control involved for each. It then identifies 20 additional scenarios and asks to identify the cardinal of internal controls for each. The scenarios cover a wide range of internal control activities across control environment, risk assessment, control activities, information and communication, and monitoring components.

Uploaded by

Mariel Taguba
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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For each scenario, identify the Component of Internal Control involved:

1. Management surveys customers about their satisfaction with the company’s service.
Monitoring
2. The human resources department investigates the educational background of prospective
employees.
Control Environment
3. Invoices are reviewed for accuracy before they are mailed to customers.
Control activities
4. Management periodically evaluates the threats to preparing reliable financial statements.
Risk Assessment
5. The internal auditors periodically evaluate the controls in the various departments of the
company.
Monitoring of Controls
6. Management has developed and distributed a code of conduct.
Control Environment
7. Budgets and forecasts are used by the production department to control expenses. The
accounting department uses a manual of accounting policies and procedures.
Control Activities
8. The accounting department uses a manual of accounting policies and procedures.
Information and Communication; Record, Process, Summarize, and report
9. Entry into the warehouse is strictly controlled by the security personnel.
Control Activities; Physical Control over assets and records
10. Management has prepared and distributed an organizational chart.
Control Environment; Organizational Structure
11. Management places a poster that reads “Do not transact business with a FIXER”.
Control Activities
12. Creation of Sub-Audit Committee mostly consisting of external executives.
Control Environment
13. Requiring every office to submit a comparative report between actual and budgeted
expenses.
Information and Communication
14. Creation of Grievance Committee or Selection and Promotion Board.
Control Environment
15. Requiring all government employees to submit a statement of assets, liabilities and net
worth every April of the current year.
Control Environment
16. Review of impact of the computerized collections system to operation.
Risk Assessment
17. Limit access to data center to only authorized individuals only.
Control Activities
18. Review of three (3) failed attempts made by system’s users.
Control Activities
19. Requiring authorization for the use of the system after office hour or during weekends.
Control Activities
20. System developers are not permitted as users of the system.
Control Activities
21. Dissemination of newly approved policies related to management of new computer
viruses.
Information and Communication
22. Assigning of limit of authority in signing of checks
Control Environment
23. Reporting of unsuccessful attempts to steal company’s information to external authorities.
Information and Communication
24. Requiring cashier to take forced vacation.
Control Activities
25. Review whether audit recommendations to noted audit observations were implemented
and functioning.
Monitoring
26. Communicate office undesirable practices to concerned management committee.
Information and Communication
27. Providing on the spot promotion. (or monthly recognition for Meritorious Achievement)
Control Activities
28. Conduct of threats and vulnerabilities assessment.
Risk Assessment
29. Distribution of audit report to concerned company’s official
Information and Communication
30. Providing orientation seminar to new recruits.
Control Environment
31. Business Continuity and backup.
Control Activities
32. Reporting Deficiencies
Information and Communication

Identify the cardinal of internal controls for each of the scenarios


below:

1. Employees who have physical custody of assets do not have access to the
accounting records.
Segregation of Duties
2. Each month the assets on hand are compared to the accounting records by an
internal auditor.
Independent Internal Verification
3. A pre-numbered shipping document is prepared for each shipment of goods to
customers.
Documentation Procedures
4. All over-the-counter receipts are registered on cash registers.
Physical Control
5. All cashier are bonded.
Human Resource Control
6. Surprise cash count on all disbursing officers.
Independent Internal Verification
7. Daily cash counts are made by Cashier department supervisors.
Independent Internal Verification
8. The Duties of receiving cash, recording cash, and having custody of cash are
assigned to different individuals.
Segregation of Duties
9. Only Cashier may operate cash registers.
Establishment of Responsibility
10. Company checks are pre-numbered.
Documentation Procedure
11. The bank statement is reconciled monthly by an internal auditor.
Independent Internal Verification
12. Blank checks are stored in a safe in the treasurer’s office.
Physical Control
13. Only the treasurer or assistant treasurer may sign checks.
Establishment of Responsibility
14. Checks signers are not allowed to record cash disbursement transactions.
Segregation of Duties
15. Cashiers are bonded.
Human Resource Control
16. General Ledgers are reconciled against it Subsidiary Ledgers on a monthly basis.
Independent Internal Verification
17. The counter clerk, in handling the pizza, compares the size of the pizza with the
size indicated on the order.
Independent Internal Verification
18. After signing a check, the signer stamps the invoice “Paid” and inserts within the
stamp, the date, check number, and amount of the check. The “Paid” invoice is
then sent t the accounting department for recording.
Documentation Procedure
19. Property custodians and other accountable officers are instructed to avail of the
forced leave.
Human Resource Control
20. Accounting for the completeness of accountable forms (e.g. checks, official
receipts, etc.)
Independent Internal Verification

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