Final answer:
Assessing the internal control system of Adidas involves using the Internal Control Questionnaire (ICQ) and Internal Control Evaluation Questionnaire (ICEQ) to evaluate the adequacy and effectiveness of control procedures.
Step-by-step explanation:
Assessing the internal control system of Adidas involves evaluating its effectiveness in achieving its objectives and safeguarding assets. One way to do this is by using the Internal Control Questionnaire (ICQ) and Internal Control Evaluation Questionnaire (ICEQ). The ICQ consists of a series of yes or no questions that assess the adequacy of control procedures in different areas such as cash receipts, inventory management, and financial reporting. The ICEQ, on the other hand, evaluates the effectiveness of these controls and identifies any weaknesses or areas for improvement. For example, in the ICQ, questions could include whether there are segregation of duties in cash handling processes, whether physical controls such as locks and cameras are in place, and whether there are regular reconciliations of financial records. The answers to these questions can provide insights into the strength of Adidas' internal controls.