Chapter 3.docx - ACC 730 Advanced Auditing Chapter 3 –...

ACC 730
Advanced Auditing
Chapter 3 – Internal Controls
What are internal controls: internal controls are defined as “a process, effected by an entity’s
leadership and other individuals, designed to provide reasonable assurance regarding the
achievement of objectives relating to operations (safeguard assets, profitability, efficiencies,
etc.), reporting (timely, accurate, complete, reporting) and compliance (complying with all
applicable laws, regulations, rules, etc.).
What are the elements of an internal control system:
2. Risk Assessment: This is where the organization needs to identify all of the things that
can go wrong with respect to their objectives (operations, reporting and compliance).
For instance, they may identify the following risks (they would likely identify many more
risks than I have listed, I am just providing an example):