Management’s and auditor’s responsibilities

Party	Responsibility	Example at Jengka Furniture
Management	Designs, implements and maintains internal controls. Assigns duties, reviews exceptions and corrects weaknesses.	The finance manager requires accounts staff to match each delivery note to an invoice. A supervisor reviews outstanding deliveries each week and follows up on missing invoices.
Those charged with governance	Oversee management’s approach to internal control and follow up on significant weaknesses. This role may be performed by the board or audit committee.	The audit committee asks why deliveries repeatedly went unbilled and requests evidence that management’s corrective action has worked.
External auditor	Obtains an understanding of relevant controls, assesses the risk of material misstatement and designs audit procedures in response. The auditor tests operating effectiveness when required and communicates significant deficiencies identified during the audit.	The auditor examines how the weekly review works. If planning to rely on it, the auditor tests whether the supervisor performed the review and followed up on exceptions during the period. www.icaew.com

Exam distinction: If the question asks for a control, describe what the company does. If it asks for a test of controls, describe what the auditor does to obtain evidence that the control operated effectively.