Client A hires part-time seasonal employees to perform routine accounting tasks during periods of high transaction volume. The employees frequently make mistakes, some of which are material, but these are usually detected by a supervisor who reviews their work. This arrangement in said to:
A) be a serious control problem .
B) be a serious problem with an effective compensating control.
C) be a serious problem without an effective compensating control.
D) require a qualified audit opinion regarding the ICFR.

Question

Quizplus · Accepted Answer

While the part-time seasonal employees making mistakes may be a serious problem, the fact that a supervisor regularly reviews their work serves as an effective compensating control. This compensating control helps to mitigate the risk of material errors going undetected, and as such, the overall control environment is not deemed to be a serious problem.

Client a Hires Part-Time Seasonal Employees to Perform Routine Accounting