Lesson: Deficiencies in the Design and Operation of Controls

This lesson delves into the deficiencies that can occur in the design and operation of controls. It highlights examples like insufficient control consciousness, inadequate segregation of duties, and inadequate design of IT and general application controls. The lesson also touches upon problems that can arise due to employees lacking qualifications and training to fulfill their assigned functions, as well as deficiencies in monitoring controls and issues with internal reporting of control deficiencies. Furthermore, the lesson discusses failures in the operation of effectively designed controls, such as dual authorization for significant disbursements, as well as failures in the information and communication component of internal control. The concept of dual control involving both preventative and detective controls is also explored in the context of safeguarding assets and preventing material misstatements in the financial statements.