Class_11_Internal_controls_web

Class_11_Internal_controls_web - Internal Control &...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
The second examination standard: The auditor should obtain an understanding of the entity and its environment, including internal control, sufficient to identify and assess the risks of material misstatement of the financial statements…
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Overall response to the risk of Overall response to the risk of material misstatement material misstatement Audit team the needs to maintain professional scepticism when gathering and evaluating audit evidence Assign more experienced staff Increased supervision Make audit procedures less predictable
Background image of page 2
Types of audit tests Types of audit tests Obtain an understanding of I/C + Tests of controls + Analytical procedures + Tests of details of balances = Sufficient competent evidence per GAAS
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The primary reason for conducting an evaluation of internal control is to give the auditors a basis for determining the nature, timing and extent of the balance audit program. Examining the business processes provides a structure for the auditor in designing procedures to test controls and financial statement transactions and balances. Reasons for Control Evaluation Reasons for Control Evaluation
Background image of page 4
Internal Control is defined as: Internal Control is defined as: the process designed and effected by those charged with governance, management, and other personnel to provide reasonable assurance about the achievement of the entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Control Risk Control Risk The risk that the client’s internal control will not prevent or detect material misstatement. The auditor does not control this risk. The auditor’s task is to assess the risk. High control risk leads to low detection risk. Requires the auditor to increase substantive testing in order that misstatements are caught.
Background image of page 6
Affects Affects on on the Audit Program the Audit Program The control risk assessment will affect the procedures included in the audit program. Each procedure should have identifiable characteristics of nature, timing and extent. Nature refers to audit techniques to be used; timing is a matter of when they are to be performed; and extent is the amount of work to be done.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
A A udit procedures udit procedures - - nature, timing nature, timing and extent and extent Nature Purpose – substantive or control Type 1. physical examination or inspection 2. confirmation 3. observation 4. enquiries of client 5. Computation (recalculation/ re- performance) 6. Analysis
Background image of page 8
A A udit procedures udit procedures - - nature, nature, timing and extent
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/23/2009 for the course AFM 480 taught by Professor Gb during the Spring '09 term at Waterloo.

Page1 / 30

Class_11_Internal_controls_web - Internal Control &...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online