Chapter _6, Internal Control Overview (3-8-11)

Chapter _6, Internal Control Overview (3-8-11) - ACCY...

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ACCY 360/560 Assurance Services “The Auditor’s Consideration of Internal Control" Chapter #6 I. AICPA standards adopted COSO's Internal Control – Integrated Framework A. Definition of I/C "a process -- effected by an entity's board of directors, management, and other personnel --designed to provide reasonable assurance regarding the achievement of objectives in the following categories: (1) reliability of financial reporting; (2) effectiveness and efficiency of operations; and (3) compliance with applicable laws and regulations." B. Identified 5 components of I/C 1. Control environment --deals with the overall control consciousness & attitudes of management, board, owners (the “tone set at the top”) 2. Risk assessment – policies & procedures to provide reasonable assurance 3. Control activities -- policies & procedures to provide reasonable assurance that management’s specific objectives will be achieved (as a memory aid, remember that I/C procedures " SCARE "!) a. S egregation of duties b. C omparison of records to actual assets (or compare key documents) c. A ccess to assets--directly or indirectly d. R e. E xecute transactions--as properly authorized
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Chapter _6, Internal Control Overview (3-8-11) - ACCY...

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