Question 1

Internal control system is the process that is designed and adopted by the directors and management of an entity to provide reasonable assurance about the achievement an entitys objectives related to financial reporting, the entitys operation and compliance to laws and regulation. Internal control system assist the entity to ensure that the companys business is conducted in effective and efficient manner and complied with the entitys internal policies as well as the laws and regulation. Besides, internal control system will help to prevent and detect fraud and error. Lastly, the internal control system ensure the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

Required: Explain the meaning and relevance to the auditors giving an opinion on financial statements of each of the management objectives above. [45 Marks] (Use no more than 750 words)