Internal control in a small entity
A small entity’s controls may be informal or rely heavily on owner-manager involvement, with limited segregation of duties. The auditor evaluates the design and implementation of relevant controls and considers whether sufficient evidence can be obtained through the planned approach. Size alone does not determine effectiveness.
Worked example
An owner reviews bank statements independently because the business has too few staff to segregate all cash duties.
Common mistake
An owner’s involvement can provide oversight but also creates opportunities for override; do not assume it is automatically an effective control.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Supporting | September 2026–June 2027 |