Disclosure controls are important because it reduces the risk of the company failing to disclose material information on a timely basis or filing regulatory documents that are incomplete or inaccurate. It helps provide reasonable assurance of achieving the company’s objectives. Also disclosure controls prevents loss of reputation, investor confidence and market value that may result from a breakdown in the disclosure controls and procedures.
1b.The potential effectiveness of an entity's internal control is subject to inherent limitations. The projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate
1c.Ford states that the one change in internal control is German Payroll System. Ford Europe launched a new payroll system for Germany during the fourth quarter of 2009. The area of the audit that will be effected by this change is the auditor’s understanding and evaluation of internal contorls. The year end balance could be materially misstated and corrupt the audit findings. It could increase the audit risk, resulting in the auditor giving an incorrect opinion.
1d.Management comforts itself that internal control will not obtain weakness by doing disclosure controls. Management also conducts an assessment of the effectiveness of their internal control over financial reporting. The assessment is based on criteria established in the framework...