RSM427H1 Lecture Notes - Lecture 2: Audit Risk, Control Risks, Financial Statement
Document Summary
Complexity of the system (3 types of packing slips) Decreasing paper trail due to automation of the newly implemented system. Miscommunication between system and branches (the design in the systems) Lack of segregation of duty (manager responsible for business transactions and back end it issues) Passwords sent by mail so wrong person can open the mails. Increasing automation often involves more reliance on trading partners and service providers to carry out internal controls. This increases the risk of controls not being carried out properly because the organization has less control over controls. Self-re(cid:448)ie(cid:449) threat (cid:271)e(cid:272)ause ad(cid:373)i(cid:374)istrator has (cid:374)o idea (cid:449)hat it (cid:373)ea(cid:374)s ((cid:272)he(cid:272)ki(cid:374)g o(cid:448)er the (cid:373)a(cid:374)ager(cid:859)s (cid:449)ork before approving credit history of customer) Inadequate compliance with internal controls because of insufficient procedures, training and monitoring. They have controlled access (head of it can access the files). But there is also a lack of segregation of duties since the manager can singularly change transactions without providing reasons.
