what are pervasive controls? provide an example of at least three?

Expert Solution

Ans - A pervasive risk is one that is found throughout the environment and affects several categories or classes of transactions. Pervasive means found everywhere or spread everywhere. A pervasive misstatement would be so serious that, to all intents and purposes the FS are useless.Pervasive problems (leading to a disclaimer or and adverse opinion) are rare. It is much more common to have qualified (except for) modified opinions where the shareholders can still make some use of the FS.

Controls are often put in place to ensure the accuracy of both pervasive and specific financial assertions. Auditors check these internal system controls to ensure that misstatements of fact are truly misstatements and not an overt attempt at fraud. Financial controls include those related to various practices such as managerial overrides, the financial reporting process at the end of an accounting period and monitoring of the risk-assessment process.

Examples of Pervasive Controls are as follows :-

1) Controls over management override.

2) Controls to monitor results of operations.

3) Controls to monitor other controls, including activities of the internal audit function, the audit committee, and self-assessment programs.

ekkarill92 answered 2 years ago

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