a)internal control system

Authorization and approval limits:
Many employees must adhere to authorization limits, and these will usually be specified in the terms of employment. For example, a junior manager may be permitted to  purchase  may have to be approved by someone more senior.

The role is vested solely on the CEO hence abundance of the authorization roles and limits.

Segregation of duties:
To minimize the risk of errors and fraud, duties associated with cash handling are often segregated. For example, in the post room of a company that received cash by post, the employee recording the cash will be a different person to the one who opens the post. Segregation is also relevant to other functions. At executive level, it is now best practice to segregate the roles of chairman and chief executive officer, and as an independent assurance function, internal audit should be totally segregated from the finance department, with a reporting line direct to the board of directors or the audit committee.

Management controls:
These controls are operated by managers themselves. An example is variance analysis, through which a manager may be required as part of their job to consider differences between planned outcomes and actual performance. Performance management of subordinates is also an integral part of many managerial positions. 

Arithmetic and accounting controls:
These controls are in place to ensure accurate recording and processing of transactions. Procedures here include reconciliations and trial balances this is to  be done by the lower level management and reports submitted to top management..

This should be done to ensure that the statement should reveal all the amount in the records to avoid manipulation by the management

b)

Role of communication

• to coordinate the activities of the organization in the effective manner and hence reducing the goal blindness
• to disseminate the information about the organization and hence policies and procedures is effectively implemented
• to creates team work within the organization hence work is done with ease to avoid conflicts

c)

i)

role of the auditor

review the internal audit by the management to put reliance on the control system

review the documentation in the company to ascertain the presentation  ,reliance ,accuracy

review management  to see the corporate government in the organization 

review the accounting standards applied in the  preparation of the  financial statement and relevance regulations e.g. lease agreements

ii)

The four typical common Auditor codes of Ethics provided:

 Integrity, to be straight forward in implementing the plan even giving the report

Objectivity, to work within the scope of the subject and to avoid duress and coercion from the management and even from the other parties

 Confidentiality, this to ensure that information received or obtained during the due process is not concealed unless consented by the organization

 Competency to apply the professional skill and knowledge obtained during the training. 

d)

•  to promote  an effective organizational governance which is aware of its roles and responsibilities and which is provided with access to the necessary information to perform these responsibilities
•  to enhance segregation of duties ,having a strong independent element on the board with no concentration of power in any one person
• to uphold formal and transparent processes for board appointments, board performance, and board and executive remuneration. This is to be facilitated by the appointment of nomination and remuneration committees to oversee these matters
•  to emphasize  the importance of accountability and audit, and requiring the establishment of audit committees and the internal audit function
•  to ensure  organization having strong internal control processes in place
• promoting greater disclosure for, and communication with, shareholders.
   

 

Step-by-step explanation

Auditing is the core activity in the business to help in  safeguarding the assets of the business and to ensure sustainability.