10-32 Components of internal control
a. Management has established a code of conduct that includes rules regarding conflicts of interest for purchasing agents. Category: 1, Assertion: Pervasive b. Waterfront has established a disclosure committee to review the selection of new accounting policies. Category: 4.6, Assertion: DAO Accuracy and Valuation, DAO Classification and Understandability. c. Any computer program revision must be approved by user departments after testing the entire program with test data. Category: 4.3.1, Assertion: Any Assertion d. The managers of each of Waterfront’s manufacturing departments must review all expenditures charged to their responsibility center weekly. Category: 5, Assertion: TAO Occurrence, Completeness, Accuracy, and Cutoff. e. The CEO, CFO, and controller review the financial consequences of business risks annually to ensure that controls are in place to address significant business risks. Category: 2, Assertion: Pervasive f. Human resources focuses on ensuring that accounting personnel have adequate qualifications for work performed in billing and accounts receivable. Category: 1, Assertion: Any Assertion g. Security software limits access to programs and data files, and keeps a log of programs and files that have been accessed, which is then reviewed by the security manager daily. Category: 4.3.1, Assertion: Any Assertion  PART 2 / AUDIT PLANNING
h. A computer program prints a daily report of all shipments that have not yet been billed to customers. Category: 4.3.2, Assertion: BAO Completeness i. The controller reviews sales and collections bimonthly. Category: 4.5, Assertion: TAO Valuation, Completeness, BAO Existence, Completeness. j. The computer compares the information on the sales invoice with underlying shipping information. Category: 4.3.2, Assertion: TAO Occurrence, Accuracy k. Customer billing complaints are directed to internal audit for follow-up and resolution. Category: 5, Assertion: TAO Occurrence,...
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