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· Inadequate design of internal control over the preparation of the financial statements
· Inadequate design of internal control over a significant account or process.
· Inadequate documentation of the components of internal control.
· Insufficient control consciousness within the organization, for example, the tone at
the top and the control environment.
· Absent or inadequate segregation of duties within a significant account or process.
· Absent or inadequate controls over the safeguarding of assets (this applies to controls
that the auditor determines would be necessary for effective internal control over
· Inadequate design of information technology (IT) general and application controls
that prevent the information system from providing complete and accurate
information consistent with financial reporting objectives and current needs.
· Employees or management who lack the qualifications and training to fulfill their
assigned functions. For example, in an entity that prepares financial statements in
accordance with generally accepted accounting principles, the person responsible for
the accounting and reporting function lacks the skills and knowledge to apply
generally accepted accounting principles in recording the entity’s financial
transactions or preparing its financial statements.
· Inadequate design of monitoring controls used to assess the design and operating
effectiveness of the entity’s internal control over time.
· The absence of an internal process to report deficiencies in internal control to
management on a timely basis.
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