Explain with reasons whether the destruction of the stock would be an adjusting or non-adjusting event in the books of the company.

 

Paice Ltd has total assets of £7,500,000 andtotal profit before tax of £500,000 for its year ending 31 December 20X7. On 5 January 20X8, there is a flood at one of its warehouses which destroys stock worth £70,000. The company does not have a valid flood insurance policy.

Question 

 

(a) Define 'internal control' and explain the role of controls testing in the statutory audit process.

(b) In the context of computerised accounting systems, what are "application controls" and "general controls." Your explanation should include at least THREE examples of EACH of these two types of controls. 

Answer rating: 100% (QA)

a Internal Control Internal control refers to the policies procedures and practices implemented by a company to ensure the reliability of financial reporting safeguard assets and promote operational e... View the full answer