A) Control environment
B) Control procedures and policies @ control activities
Control environment is abt attitude of board n mgt, whether they have integrity(honesty) and value the importance of running a sound internal control system. So, if their attitude is good, they will raise awareness and foster good attitude among ppl in the org. They will communicate co’s biz objs to the employees and not engage in fraud or circumvent internal control procedures for their own convenience. -------------------------------------------------
Control environment is important! Cos if it’s weak, then lower level staff morale will be low and will also follow board and management’s bad attitude n disregard internal control procedures n policies Control procedures and policies/control activities got four types: a) Financial: PAPAMOSS… authorization, physical safeguard, segregatn of duties etc pg 104-105 b) Operational… focus on achieving effectiveness efficiency economy through PREVENTIVE, DETECTIVE, CORRECTIVE measures, internal auditor can contribute to the operational controls n add value to the organistion’s value chain c) Compliance: legal n regulations… if question asks banks or insurance co or like in mock exam, the BMB train co gotta comply with safety regulations… then can use this point d) Risk management: to align risk appetite n strategy to fulfill obj , take risks knowingly n survive possible crisis ____________________________________________________________
Now, turnbull prescribes ways to evaluate the SOUNDNESS OF INTERNAL CONTROL SYSTEM, both control environment n control procedures n policies are subjected to these criteria for evaluation on soundness…
A) Maintaining a good Control environment should be embedded in the corporate culture… eg the code of conduct,...