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Listed Below Are Examples of Matters That May Be Reportable

Question 101

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Listed below are examples of matters that may be reportable conditions. Indicate the nature of each event by using the following code letters:

Premises:

Responses:

Failure to safeguard assets from loss, damage, or misappropriation.

Failures in the Operation of Internal Control

Absence of appropriate segregation of duties consistent with appropriate control objectives.

A system fails to provide complete and accurate output consistent with the

Intentional override of the internal control system by those in authority to the detriment of the overall objectives of the system.

Failure to perform tasks that are part of the internal controls, such as reconciliations not prepared or not prepared on a timely basis.

Inadequate procedures for appropriately assessing and applying accounting principles.

Willful wrongdoing by employees or management.

Manipulation, falsification, or alteration of accounting records or supporting documents.

Absence of other control techniques considered appropriate for the type and level of transaction activity.

Inadequate provisions for the safeguarding of assets.

Intentional misapplication of accounting principles.

Misrepresentation by client personnel to the auditor.

A system fails to provide complete and accurate output consistent with objectives and current needs because of design flaws.

Employees or management lack the qualifications and training to fulfill their assigned functions.

Premises:

Failure to safeguard assets from loss, damage, or misappropriation.

Absence of appropriate segregation of duties consistent with appropriate control objectives.

Intentional override of the internal control system by those in authority to the detriment of the overall objectives of the system.

Failure to perform tasks that are part of the internal controls, such as reconciliations not prepared or not prepared on a timely basis.

Inadequate procedures for appropriately assessing and applying accounting principles.

Willful wrongdoing by employees or management.

Manipulation, falsification, or alteration of accounting records or supporting documents.

Absence of other control techniques considered appropriate for the type and level of transaction activity.

Inadequate provisions for the safeguarding of assets.

Intentional misapplication of accounting principles.

Misrepresentation by client personnel to the auditor.

A system fails to provide complete and accurate output consistent with objectives and current needs because of design flaws.

Employees or management lack the qualifications and training to fulfill their assigned functions.

Responses:

Failures in the Operation of Internal Control

A system fails to provide complete and accurate output consistent with the

Correct Answer:

Premises:

Responses:

Failure to safeguard assets from loss, damage, or misappropriation.

Absence of appropriate segregation of duties consistent with appropriate control objectives.

Intentional override of the internal control system by those in authority to the detriment of the overall objectives of the system.

Failure to perform tasks that are part of the internal controls, such as reconciliations not prepared or not prepared on a timely basis.

Inadequate procedures for appropriately assessing and applying accounting principles.

Willful wrongdoing by employees or management.

Manipulation, falsification, or alteration of accounting records or supporting documents.

Absence of other control techniques considered appropriate for the type and level of transaction activity.

Inadequate provisions for the safeguarding of assets.

Intentional misapplication of accounting principles.

Misrepresentation by client personnel to the auditor.

A system fails to provide complete and accurate output consistent with objectives and current needs because of design flaws.

Employees or management lack the qualifications and training to fulfill their assigned functions.