RSM 323 Lecture _4 Slides (6 per page)

RSM 323 Lecture _4 Slides (6 per page) - 04/10/2010...

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04/10/2010 1 Internal Control & Audit Planning 2 RSM323 Auditing I: Fal 2010 Agenda Recap of Lecture #3 Overview of the Audit Process Understanding the Engagement Audit Planning Tests of Controls 3 RSM323 Auditing I: Fal 2010 Recap of Lecture #3 Quiz #2 Any questions before moving on? 4 RSM323 Auditing I: Fal 2010 Overview of the Audit Process RSM323 Auditing I: Fal 2010 5 Audit Process 1. Perform Client Acceptance Procedures 2. Obtain an Understanding of the Engagement 3. Plan the Audit 4. Perform the Audit Procedures 5. Form an Opinion 6. Issue the Appropriate Report 6 RSM323 Auditing I: Fal 2010 Understanding the Engagement RSM323 Auditing I: Fal 2010 7
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04/10/2010 2 Understanding the Engagement RSM323 Auditing I: Fal 2010 8 CAS 315 requires that as part of the understanding of the engagement, the auditor must understand: The Entity and its Environment The Entity’s Internal Control This understanding is required in order to assess the overall risk of the engagement as well as to identify risk areas that need to be addressed Any risks that relate to the entity’s internal control are called control risks Understanding Internal Control What is Internal Control? Internal Control is the process designed, implemented and maintained 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 The term “controls” refers to any aspects of one or more of the components of internal control 9 RSM323 Auditing I: Fal 2010 Understanding Internal Control Components of Internal Control 1. Control Environment 2. Entity’s Risk Assessment Process 3. Information System 4. Monitoring of Controls 5. Control Activities Company/ Entity Level Controls Specific Controls 10 RSM323 Auditing I: Fal 2010 Control Environment Characterized by the attitudes, awareness, actions and structure of management and those charged with governance Sets the tone of an organization, influencing the control consciousness of its people The strengths in the control environment elements collectively provide an appropriate foundation for the other components of internal control 11 RSM323 Auditing I: Fal 2010 Control Environment Elements of the control environment Communication and enforcement of integrity and ethical values Commitment to competence Participation by those charged with governance Management’s philosophy and operating style Organizational Structure Assignment of authority and responsibility Human resource policies and practices External influences IT control environment 12 RSM323 Auditing I: Fal 2010 Entity’s Risk Assessment Process The entity’s risk assessment process should involve: Identifying business risks relevant to the financial reporting
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This note was uploaded on 05/09/2011 for the course RSM 323 taught by Professor Lisaharvey during the Spring '11 term at University of Toronto- Toronto.

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RSM 323 Lecture _4 Slides (6 per page) - 04/10/2010...

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