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Misstatements   were   identified   in   the   confirmation   of   accounts   receivable.   Indicate   whether   you   believe &nb

Misstatements   were   identified   in   the   confirmation   of   accounts   receivable.   Indicate   whether   you   believe   these   indicate   one   or   more   deficiencies in internal control.

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Yes, this indicates deficiencies in internal control and the deficiencies can be more than one.

It should be noted that confirmation of accounts receivable is done by auditors wherein they obtain evidences from third parties i.e. parties who owe money to the company. When misstatements are identified in the conformation of accounts receivable then it means that there is some error in recording amounts by the company and hence it could point to one or more internal control deficiency. The misstatement can be due to either error or fraud and both are due to internal control deficiencies.

The deficiencies can be in the form of inadequate documentation or records, lack of control with regards to authorization of transactions, absence of oversight and review, no separation of duties etc. All these deficiencies can lead to error or fraud here.

The components of the internal control process are: (1) The control Environment (2) Risk Assessment (3) Control activities (4) Information and Communication and (5) Monitoring. The misstatements can happen due to deficiency in any of these components or elements of internal control.

ekkarill92 answered 1 year ago
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