ACG 5637 Chapter Notes - Chapter 11: Remittance, Financial Statement, Internal Control
11 Nov 2020
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Different types of controls may be used to mitigate different risks. A company has 4 options for responding to a specific risk : accept, avoid, share, reduce. Manty of these controls may be either manual or automatic. Every company has a slightly different set of activities and risks, resulting in each having a slightly different set of controls. Entity level controls over sales and customer service. In sales and customer service the entity level controls might include controls for actively monitoring risk conditions and timely responses to increased risk. One specific type of entity level control would be review of management"s monitoring controls such as performance indicators. The auditor must consider both the cost of obtaining information and the reliability of the information when deciding which performance indicators to examine and evaluate. Negative performance indicators can put stress on credit managers to improve performance by becoming overly aggressive with customers or imposing overly strict conditions on customer credit.
