10-20 (osjectives 10.3, 10-4) Following are descriptions of 10 internal controls. 1, Acompany uses benchmark data to assess losses from theft. It then compares its own, data with those of other companies. 2. The company adopts the use of narratives and data flow diagrams to document the procedures relating to its financial reporting. 3. The audit committee is committed to establish procedures for “whistleblowing” any accounting, internal control, and auditing matters from employees, customers, and liers. 4 Theaccounting department performs a three-way match by comparing data between the purchase order, goods received note, and invoice to ensure mathematical accuracy. 5. The company establishes a number of key performance indicators for many financial processes. The management then regularly tracks the performance according to es- tablished targets for evaluation. 6. The company strictly follows a full system development life cycle when it develops in- house software. This covers implementation, security, and conversion issues of the software. 7. The company publishes a bi-monthly newsletter on its intranet. The newsletter includes a column on matters relating to the company’s code of conduct, which emphasizes the importance of integrity. 8. The company has developed a financial and internal control reporting package. The accounting department generates the reports every month and submits them to the directors for review. 9. An internal audit department has been established to conduct separate evaluations ‘on the company’s internal controls. 10. The company constantly reviews websites, social media, and trade publications in order to observe changes in the external market. The management then assesses the impact to the company's operations. Indicate which of the five COSO internal control components is best represented by each internal control. a. Control environment d. Information and communication 1b. Risk assessment e. Monitoring c. Control activities RequiredRequired 10-22 (OBJECTIVE 10-3) The following are misstatements that have occurred in Merry Accessories, a trading company selling handbags and accessories: 1. A purchase clerk regularly orders accessories for personal use. These orders always cost less than $3,000. The company requires authorization only for purchase orders above $3,000. ). The warehouse department checks the quality of a shipment it receives and verifies its quantity against the supplier's dispatch note. However, they do not verify this against the purchase order as it was never sent to them. The shipment included three batches of handbags that the company did not order but paid for. ‘Thereis no application control over recording invoices. 4. The purchase ledger clerk, who records invoices daily, makes several mistakes record ing them. As a result, suppliers are paid incorrectly. ‘The finance director only approves the total amount of payments to be made from a list of payees, some of whom are fictitious. ‘The sales ledger clerk takes a vacation during Christmas. Upon returning in January, she enters all the unrecorded sales that were pending from December as January's sales for the sake of convenience. While the sales ledger clerk is on holiday. a salesperson helps input the sales into the accounting system. He fails to enter two cash sales transactions but marks them as ‘recorded’ in the system. A newly recruited sales clerk either forgets to enter the discount value or enters an incorrect value of discount. a. For each misstatement, identify one or more types of controls that were absent. For each misstatement, identify the transaction-related audit objectives impacted. For each misstatement, suggest a control that may have prevented or detected the misstatement. 1 » a ™ » oF