The following questions are part of an internal control questionnaire for the investment process. For each question:
a. Describe the misstatement in the financial statements that could occur if the client answered "no" to the question.
b. Explain how you would design a substantive test to evaluate the potential mis statement in the financial statements due to the missing control.
c. If the client answers "yes" to the question, describe an internal control that the client could use.
d. Describe how you might test the internal control described in part (c).
Answer the following internal control questions for the investment process:
(1) Are brokerage statements reconciled to the general ledger monthly?
(2) Does the accounting department review all significant transactions?
(3) Are investment classifications based on legitimate management intentions?
(4) Does senior management review disclosures?
(5) Does the board of directors authorize investment strategies?

  • CreatedJanuary 22, 2015
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