Effective internal controls are a major factor in deterring fraud and preventing misleading financial statements. Communicating the findings regarding the effectiveness of the controls to shareholders, creditors, and other investors is vitally important.
Refer to Exhibit 1 on page 351, Management's Discussion and Analysis Regarding Controls, from Shoppers Drug Mart's annual report, to answer the following questions:
1. Who is responsible for internal controls over financial reporting?
2. What framework was used as the basis for the assessment of the effectiveness of the internal controls?
3. Do the internal controls established at Shoppers Drug Mart guarantee accurate financial statements?
4. What policies and procedures are included in Shoppers Drug Mart's internal controls?