Tag (SQ): Internal Control
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- 20 Marks
Discuss objectives of internal control system and explain COSO framework components in relation to PEFA.
Question
(a)
The PEFA assessment of a PFM system considers internal control system of the country, as the internal control system plays a vital role across every pillar in addressing risks and providing reasonable assurance that operations are carried out in orderly and open manner.
Required:
(i) Explain the objectives of an effective internal control system.
(ii) With reference to the COSO framework, explain the components of internal control system in relation to the PEFA framework.
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- 10 Marks
Prepare a management report on payroll internal control deficiencies at Bibini Co. Ltd., including implications and recommendations.
Question
Kofi & Co. have audited the annual financial statements of Akoma Co. Ltd., a public limited liability company, for the year ended 31st December 2014. The accounting system of the company is partially computerised.
During the audit, it was detected that just two members of staff, out of one hundred and fifty workers, were entirely and equally responsible for the maintenance of personnel records and preparation of the payroll. The chief accountant only confirms that the amount of the wages and salaries cheque agrees with the total of the net wages column in the payroll, then he signs without any reasonableness check of the amount of the total wages cheque. This situation is a serious deficiency in the system of internal control which can have serious implications. As audit senior, you are considering communicating this situation to the management, showing the deficiency, implications, and recommendations.
Required:
Prepare an appropriate report to management on the deficiency noted in the system of internal control for payroll.
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