Components of Internal Controls (10 marks) CAS 315 identifies five components of internal control that auditors must understand for any entity they are auditing. The components are the control environment, the risk assessment, control activities, information and communication, and monitoring. The following are internal controls implemented by retail store. Match each of the five components with the activities described below that most closely relate to them. 

Component of internal controls 

i) An internal audit staff is employed to continuously evaluate the effective of internal controls and communicate weaknesses to management. 

ii) Managers are held accountable for the performance of both themselves and those working for them. 

iii) Before a purchase for new inventory can be authorized, it must be signed by both the store manager and warehouse supervisor. 

iv) Each time a change in store layout is done, a thorough analysis is required on how it will affect both employees and customers. 

v) All internal controls procedures are documented and available for employees to review. 

vi) Periodic meetings are held where store employees are asked about recent challenges, how they can be solved, and if their challenges could have resulted in error/fraud. 

vii) Store announcements are made on the store’s website, and allows for customers to comment with their feedback. 

viii) internal control procedures are reviewed quarterly by the CEO and COO to ensure they are still adequate. 

ix) Clear job requirements are posted for open positions before hiring occurs and no exceptions are made. 

x) Inventory counts are conducted on a regular basis and random spot checks are performed on high risk inventory.

Answer rating: 100% (QA)

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