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Systems and controls

Limitations of controls

The auditor can never eliminate the need for substantive procedures entirely.

There are inherent limitations to the reliance that can be placed on internal controls
due to:

 Human error in the use of judgment

 Ineffective controls

 Collusion of staff in circumventing controls

 The abuse of power by those with ultimate controlling responsibility (i.e.
management override)

 Use of management judgment on the nature and extent of controls it chooses to
implement.

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