Which are the major factors to consider in assessing and evaluating the Internal control system of your client's environment?

thanks for the invitation

Agrees with the answers

The major factors to consider in assessing and evaluating the internal control system in clients environment are:

♦ The size of the entity.

♦ The nature of the entity’s business, including its organisation and ownership characteristics.

♦ The diversity and complexity of the entity’s operations.

♦ Applicable legal and regulatory requirements.

♦ The circumstances and the applicable component of internal control.

♦ The nature and complexity of the systems that are part of the entity’s internal control, including the use of service organisations.

♦ Whether, and how, a specific control, individually or in combination with others, prevents, or detects and corrects, material misstatement. 

♦ Materiality.

♦ The significance of the related risk.

The main factors are:

- The relationship between the customers of the company?

- Delays in their payment?

- Are service companies, the admainistration, individuals, traders, others companies?

- The links of dependencies between the business and its customer?

- Are the risks spread over many customers?

- Customer behavior?

- The relationship between the needs and the product sold

- Are customers stable?

- Is the market saturated?

- The customer purchasing power

- The geographical distribution of customers

- Is customer concentrated or dispersed?

- Does the customer belongs to several economic sectors?

- Customers do they pay with regularity and punctuality?

 

 

The major factors are management integrity and ethical values of the clients or customers, operating philosophy and commitment competency, also financial stability and effecient control system.