Figure 11-7 contains a listing of tests of operating effectiveness for internal controls related to the sales and customer service process. For each type of control activity (performance reviews and overall process management, information processing controls, physical controls, and segregation of duties and process design), describe the impact on the audit for each of the following results of controls testing.

a. Controls are found to be operating effectively

b. Controls are found to be operating ineffectively

Figure 11-7

Transcribed Image Text:

Magnitude of Risk Outcome Low Credit risk High Ineffective advertising Poor product value Inaccurate pricing Late delivery Processing errors Excess returns Low High Likelihood of Risk