To properly assess the internal controls in place at TPC, you have found that there are three major objectives that an entity should follow in designing an effective internal control system:
reliability of financial reporting
efficiency and effectiveness of operations
compliance with laws and regulations
Explain what each of these mean and how they might be satisfied at TPC.
Due to the fact that each of the three divisions has been extremely profitable, auditors would want to perform substantive testing to ensure that profits do not contain material misstatements. A check of internal controls should verify that the control environment is effective, and that high risk areas aren't present within the internal control structure over financial reporting. Each of ...
The solution provides a discussion examining how an effective internal control system can be designed at TPC which addresses the reliability of financial reporting, efficiency and effectiveness of operations, and compliance with laws and regulations. This solution is written based on my experience as an auditor who actually designs effective internal control systems.