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Describe the Limitations of Internal Control

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Essay

Describe the limitations of internal control. Why do limitations on internal control exist?


Definitions:

External Party

An individual or organization that is separate from the entity being referred to and not directly involved in its operations or management.

Legal Entities

Organizations, companies, or individuals that have legal rights and obligations, allowing them to enter into contracts, sue, and be sued.

Consolidation Adjustment

Adjustments made to financial statements to account for the financial results of subsidiary companies as if they were part of the parent company.

Tax Effect

Refers to the impact of tax laws on an entity's financial statements, specifically how changes in tax rates or laws affect the valuation of assets, liabilities, and net income.

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