Class_7_Internal_controls_web

Class_7_Internal_controls_web - Learning Objectives 1....

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1. Describe the control environment, general control procedures and application control procedures used in information systems. 1. Identify the basic components of internal control, explaining how a business uses them to achieve its control objectives. Learning Objectives Learning Objectives
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What is Internal Control? What is Internal Control? The policies & procedures established & maintained by management to provide reasonable assurance about the achievement of the entity’s objectives (reliable reporting, effectiveness and efficiency, compliance with laws) I/C is designed and implemented to address identified business risks that threaten the achievement of these objectives See CICA Handbook 5141.042
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Management responsibilities with Management responsibilities with respect to internal control respect to internal control Provide reliable accounting and operating data Safeguard assets and records Promote operational efficiency Prevent and detect error, fraud or illegal acts Ensure compliance with laws and regulations Should be cost-effective
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Auditor responsibilities with Auditor responsibilities with respect to internal control respect to internal control Exercise professional skepticism Document and evaluate internal controls of financial systems Test controls if reliance intended Communicate weaknesses New CAS under ISA Currently communicate material I/C deficiencies Future communicate all significant I/C deficiencies
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Concepts when studying I/C Concepts when studying I/C Remember, it is management’s responsibility to establish and maintain I/ C: the auditor evaluates and may test these controls The auditor can provide reasonable, but not absolute assurance I/C have inherent limitations Why?
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Internal Control Components Internal Control Components Internal control consists of the following: a. the control environment, b. the entity’s risk assessment process, c. the information system and business processes relevant to financial reporting and communication, d. control activities, and e. the monitoring of controls
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A. Control Environment (CE)
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Class_7_Internal_controls_web - Learning Objectives 1....

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