Page 105 - CA Final PARAM Digital Book.

• The Susceptibility to loss or fraud of the related asset or liability. (Moisture level
in coal has huge impact on coal weight as compared to wooden blocks)
• The Subjectivity and complexity of determining estimated amounts, such as fair
value accounting estimates. (Quality determination is difficult in coal as compared
to wooden blocks)

➢ Important Controls: - POMPS
Controls over Prevention & Detection of Frauds / Outside Normal Course of Business
/ Monitoring Controls / Period End Financial Reporting Process / Significant
Accounting Policies
• The importance of the controls to the financial reporting process; for example:
• General monitoring controls (such as oversight of management).
• Controls over the prevention and detection of fraud.
• Controls over significant transactions with related parties.
• Controls over significant transactions outside the entity’s normal course of
business.
• Controls over the period-end financial reporting process (such as controls over
non-recurring journal entries)
• Controls over the selection and application of significant accounting policies.

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