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10-32 (Components of internal control) Internal controls can be categorized using the following framework. Required a.

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10-32 (Components of internal control) Internal controls can be categorized using the following
framework.
Required
a. Indicate the category of internal control applicable to each procedure using the framework
below.
b. Identify an assertion to which each procedure pertains (some procedures may have a
pervasive impact on multiple assertions).
1. Control environment
2. Risk assessment
3. Information and communication
4. Control activities
4.1. Authorization
4.2. Segregation of duties
4.3. Information processing controls
4.3.1. Computer general controls
4.3.2. Computer application controls
4.3.3. Controls over the financial reporting process
4.4. Physical controls
4.5. Performance reviews
4.6. Controls over management discretion in financial reporting
5. Monitoring
6. Antifraud programs and controls
          Following is a list of controls prescribed by Waterfront, Inc.
a. Management has established a code of conduct that includes rules regarding conflicts of
interest for purchasing agents.
b. Waterfront has established a disclosure committee to review the selection of new
accounting policies.
c. Any computer program revision must be approved by user departments after testing the
entire program with test data.
d. The managers of each of Waterfront's manufacturing departments must review all
expenditures charged to their responsibility center weekly.
e. The CEO, CFO, and controller review the financial consequences of business risks annually
to ensure that controls are in place to address significant business risks.
f. Human resources focuses on ensuring that accounting personnel have adequate qualifications
for work performed in billing and accounts receivable.
g. Security software limits access to programs and data files, and keeps a log of programs
and files that have been accessed, which is then reviewed by the security manager daily.
h. A computer program prints a daily report of all shipments that have not yet been billed
to customers.
i. The controller reviews sales and collections bimonthly.
j. The computer compares the information on the sales invoice with underlying shipping
information.
k. Customer billing complaints are directed to internal audit for followup and resolution.
l. The documentary transaction trail for all credit sales is documented in company policy
manuals.
m. A committee of the board of directors evaluates and monitors business risks.
n. Access to spreadsheets used in the financial reporting process is limited and spreadsheets
are tested with test data on a quarterly basis.

10-32 (Components of internal control) Internal controls can be
categorized using the following
framework.
Required
a. Indicate the category of internal control applicable to each
procedure using the framework
below.
b. Identify an assertion to which each procedure pertains (some
procedures may have a
pervasive impact on multiple assertions).
1. Control environment
2. Risk assessment
3. Information and communication
4. Control activities
4.1. Authorization
4.2. Segregation of duties
4.3. Information processing controls
4.3.1. Computer general controls
4.3.2. Computer application controls
4.3.3. Controls over the financial reporting process
4.4. Physical controls
4.5. Performance reviews
4.6. Controls over management discretion in financial reporting
5. Monitoring
6. Antifraud programs and controls
Following is a list of controls prescribed by Waterfront, Inc.
a. Management has established a code of conduct that includes rules
regarding conflicts of
interest for purchasing agents.
b. Waterfront has established a disclosure committee to review the
selection of new
accounting policies.
c. Any computer program revision must be approved by user departments
after testing the
entire program with test data.
d. The managers of each of Waterfront’s manufacturing departments must
review all
expenditures charged to their responsibility center weekly.
e. The CEO, CFO, and controller review the financial consequences of
business risks annually
to ensure that controls are in place to address significant business
risks.
f. Human resources focuses on ensuring that accounting personnel have
adequate qualifications
for work performed in billing and accounts receivable.
g. Security software limits access to programs and data files, and keeps
a log of programs
and files that have been accessed, which is then reviewed by the
security manager daily.
h. A computer program prints a daily report of all shipments that have
not yet been billed
to customers.
i. The controller reviews sales and collections bimonthly.
j. The computer compares the information on the sales invoice with
underlying shipping
information.
k. Customer billing complaints are directed to internal audit for
followup and resolution.
l. The documentary transaction trail for all credit sales is documented
in company policy
manuals.
m. A committee of the board of directors evaluates and monitors business
risks.
n. Access to spreadsheets used in the financial reporting process is
limited and spreadsheets
are tested with test data on a quarterly basis.

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