QUES'I'IDN 4 [26 marks} In terms of ISA 315 [Revised] Identifying and assessing the risks of material misstatement, the components of internal control are as follows: {i} control environment {ii} the entity's risk assessment process {iii} the information system relevant to nancial reporting and communication {iv}! control activities and {v} monitoring of controls. The statement recommends that dividing internal control into the above components provides a useful framework for the auditor to consider the client's internal control. At Black 'n Blue Ltd the following policies, procedures or conditions exist. 1. There is strong segregation of duties in the inventory cycle between receiving inventory, its custody, the issue of inventory and the recording of all movement in the perpetual inventory records- 2. The board of directors and senior management meet every six months to identify the challenges facing the company and how successfutly they are being addressed. 3.The company's organizational structure is designed in such a way as to provide the board with a realistic chance of achieving its objectives on an ongoing basis. 4. The human resource department goes to great lengths to define the skills necessary for each job category and to recruit suitable personnel. 5. The nancial director meets frequently with the financial accountant to ensure d'lat information requjred to be disclosed by IFFES [the reporting standard used by the company] is properly accumulated, recorded and processed. :5. Access to the company's network is controlled by the use of comprehensive logical controls e.g. user IDs, user profiles, passwords, and is granted on a need to know basis. IThe recording in the general ledger of sales purchases etc, processed by the computer is achieved by passingjournal entries. All journal entries are scrutinized and authorized by two senior financial accounting department employees. 8.15.\" transactions keyed into the computer via terminals are subject to a wide range of input controls. 5*. The internal audit department conducts frequent reviews of breakdowns in internal control and how these are corrected. 10. To enter Black 'n Blue Ltd's computer facility, warehouse and processing plant, an individual must place his thumb on a biometric scanner