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Chapter 8

1.3 Benefits of internal control systems

 Effectiveness and efficiency of operations

 Reliability of financial reporting

 Compliance with applicable laws and regulations

NB These may further give rise to improved investor confidence.

1.4 Limitations of internal control systems

NB The UK Turnbull report (in paragraph 22) gives examples of causes of failure but
this list is not exhaustive.

 Poor judgement in decision-making.

 Human error can cause failures

 Control processes being deliberately circumvented by employees and others

 Management overriding controls

 Unforeseeable circumstances

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