• Few employees in the accounting department, making it difficult to achieve adequate
segregation of duties among key employees. It is common to find one employee
performing several conflicting roles.
• There is little or no separation between the owners of the entity and management. Thus,
management or the owners can easily over side the very controls they have put in place.
• The volume of transactions is usually small compared with larger entities and
accordingly, it is more efficient and effective for the auditor not to rely on the control
system but carry out a detailed substantive audit.
• Small entities find it not cost effective, to maintain the full range of documentation and
records that would be expected for a large entity. Thus, there is no assurance that the
system will enhance completeness and accuracy of recording transactions.
Kavungya answered the question on May 14, 2019 at 12:57
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Date posted: May 14, 2019. Answers (1)
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