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Hi,
Was just going through the BBP revision kits and come across the above question. They asked for deficiencies, controls and test of controls.
My understanding is there are two process to internal controls one being objectives, controls and TOC. The other being deficiencies, consequences and recommendations. But in this particular question the deficiencies seem to be control objectives? (over/under and effect on FS).
I understand they can have a mix of both the types of questions but these are two different things and I answered as a deficiency question.Also is CARCAP used for control procedure and AIEOU for TOC?
Thanks
AJ
I don’t have the BPP revision kit.
A control objective is met by having a control in place. So if your objective was to ensure that only proper wages were paid, then a control could be that all overtime claims are authorised by a manager.
If there is no such authorisation then the deficiency in control means the objective is not met. I can’t answer further without the question and answer.
I don’t know what the mnemonic CARPAC is. AEIOU are ways of collecting audit evidence, buy Analytical procedures (A) cannot help with testing internal controls. The rest can be.
Thank you for your quick response.
I was just confused over the wording of deficiency and then them explaining control objective but thanks any way.
Sorry I meant CARCAP as in comparison, authorisation, reconciliation, computer controls, arithmetic, physical controls – are these used for control procedures.
Okay it’s just IEOU for TOC.
Thanks
CARPAC OK but:
1 I would add segregation of duties somewhere as a control
2 Inspection is also a control eg to ensure goods received are not damaged.
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