Listed below are controls that have been developed by the management of Cirus Ma

Question

Listed below are controls that have been developed by the management of Cirus Manufacturing Co.

1. Management surveys customers about their satisfaction with the company's service.

2. The human resources department investigates the educational background of prospective employees.

3. Invoices are reviewed for accuracy before they are mailed to customers.

4. Management periodically evaluates the threats to preparing reliable financial statements.

5. The internal auditors periodically evaluate the controls in the various departments of the company.

6. Management has developed and distributed a code of conduct.

7. Budgets and forecasts are used by the production departments to control expenses.

8. The accounting department uses a manual of accounting policies and procedures.

9. Entry into the warehouse is strictly controlled by security personnel.

10.    Management has prepared and distributed an organizational chart.

Required:

For each of the controls, identify the internal control component and, if applicable, the   sub­ component or principle 10 which it relates.

Explanation / Answer

Since, the question is very specific in nature, no explanation could be provided.

____

The internal control component and sub-component/principle have been provided in the table below:

S.No. Control Internal Control Component Subcontrol Component/Principle 1 Management surveys customers about their satisfaction with the company's service. Monitoring Ongoing 2 The human resources department investigates the educational background of prospective employees. Control Environment Human Resource Policies and Procedures 3 Invoices are reviewed for accuracy before they are mailed to customers. Control Activities Application Controls 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 Seperate Evaluations 6 Management has developed and distributed a code of conduct. Control Environment Integrity and Ethical Values 7 Budgets and forecasts are used by the production departments to control expenses. Control Activities Performance Reviews 8 The accounting department uses a manual of accounting policies and procedures. Accounting Information and Communication System 9 Entry into the warehouse is strictly controlled by security personnel. Control Activities Physical Controls 10 Management has prepared and distributed an organizational chart. Control Environment Organizational Structure

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