(Components of internal control) The chapter identified fivecomponents of internal control.
Listed below are specific control policies and proceduresprescribed by Suntron Company.
1. Management gives careful consideration to the requisiteknowledge and skills personnel
need at all levels of the organization.
2. General controls and application controls are established in theelectronic data processing
department.
3. Management acts to reduce or eliminate incentives andtemptations that might lead
individuals to engage in dishonest or illegal acts.
4. Management is alert to complaints received from customers aboutbilling errors.
5. Management gives special consideration to the risks that canarise from the use of information
technology in the accounting system.
6. Employeesâ responsibilities are assigned so as to avoid anyindividualâs being in a position
to both commit an error or irregularity and then conceal it.
7. IT management has designed controls to prevent unauthorized useof IT equipment,
data files, and computer programs.
8. The processing of payroll includes a check on the total numberof hours submitted. If more than 65 hours are reported in a weeklypay period, the transaction is printed on
an exception report and put in a suspense file for additionalreview or additional
authorization.
9. Suntronâs internal audit staff periodically assesses theeffectiveness of various ICS
components.
10. Policy manuals, accounting and financial reporting manuals, anda chart of accounts
have been developed and implemented.
Required
a. Identify the components of internal control to which each policyor procedure relates.
b. For each item, identify one other policy or procedure for thatinternal control component
that is not on the preceding list.
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