Use Table to create a questionnaire checklist that can be used to evaluate controls in the general ledger and reporting cycle.
a. For each control issue, write a Yes/No question such that a “No” answer represents a control weakness. For example, one question might be, “Is access to the general ledger restricted?”
b. For each Yes/No question, write a brief explanation of why a “No” answer represents a control weakness.
TABLE Threats and Controls in the General Ledger and Reporting System
ACTIVITY | THREAT | CONTROLS (FIRST NUMBER REFERS TO THE CORRESPONDING THREAT) |
General issues throughout entire general ledger and reporting cycle | 1. Inaccurate or invalid general ledger data | 1.1 Data processing integrity controls |
| 2. Unauthorized disclosure of financial statement | 1.2 Restriction of access to general ledger |
| 3. Loss or destruction of data | 1.3 Review of all changes to general ledger data |
|
| 2.1 Access controls |
|
| 2.2 Encryption |
|
| 3.1 Backup and disaster recovery procedures |
Update general ledger | 4. Inaccurate updating of general ledger | 4.1 Data entry processing integrity controls |
| 5. Unauthorized journal entries | 4.2 Reconciliations and control reports |
|
| 4.3 Audit trail creation and review |
|
| 5.1 Access controls |
|
| 5.2 Reconciliations and control reports |
|
| 5.3 Audit trail creation and review |
Post adjusting entries | 6. Inaccurate adjusting entries | 6.1 Data entry processing integrity controls |
| 7. Unauthorized adjusting entries | 6.2 Spreadsheet error protection controls |
|
| 6.3 Standard adjusting entries |
|
| 6.4 Reconciliations and control reports |
|
| 6.5 Audit trail creation and review |
|
| 7.1 Access controls |
|
| 7.2 Reconciliations and control reports |
|
| 7.3 Audit trail creation and review |
Prepare financial statements | 8. Inaccurate financial statements | 8.1 Processing integrity controls |
| 9. Fraudulent financial reporting | 8.2 Use of packaged software |
|
| 8.3 Training and experience in applying IFRS and XBRL |
|
| 8.4 Audits |
|
| 9.1 Audits |
Produce managerial reports | 10. Poorly designed reports and graphs | 10.1 Responsibility accounting |
|
| 10.2 Balanced scorecard |
|
| 10.3 Training on proper graph design |
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