Question

Scenario 9

Ms. Yasmin Khan Mohammed is the chief auditor of Yasmin Audit Team. Recently the team is invited to conduct the external audit of Omantel. A true and fair report has to be prepared on the client company. Omantel has effectively employed the internal control components to various departments and activities.

Question 9:

List and explain any 5 elements included in an unmodified audit report with reference to Omantel. (5 X 1= 5Marks)

Question 10:

Discuss any five inherent limitations of the internal control system of the client business. (5 X 1= 5Marks)

Answer 1

There are various Inherent Limitation of the Internal control system which as:

-Internal control system is although applied but not give assurance to the management that objective of the organisations are met as per the norms.

-Chance of human error is also observed as mistake is taken from the person involved, by forgetting to use control steps, or may be person not able to understand how control system can be used.

-There is also serious drawback of the system is not segregation of the duties due to not properly designed.

-In order to get personnel advantage some of the member of the management team is override any of the aspect of the control system.

-When two or more person which are engaged on the same task may be chance of collusion to each other on some matters which result to effects the internal control report.