Audit Final - Auditing Internal Controls - Internal...

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Auditing Internal Controls - Internal Controls o A process, affected 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: Reliability of financial reporting Effectiveness and efficiency of operations Compliance with applicable laws and regulations - Audits prior to SOX 404 o Choice of strategy depends on: Existence of IC Perceived quality of IC Cost/benefit analysis (effectiveness and efficiency) - Audits post SOX 404 o Management’s responsibility – to assess effectiveness of internal controls Accept responsibility Evaluate effectiveness of IC cover financial reporting Present written assessment as of year end Report to accompany the F/S o Auditor’s responsibility – Audit IC F/S – to express opinion and provide reasonable assurance on the financial statements Search for material misstatements IC – to express opinion on the effectiveness of IC over financial reporting Search for material control weaknesses o The audit of IC has to be approved by audit committee o Auditors can use the work of others (internal auditors) o Auditors can obtain evidence on IC operating effectiveness at any point of time but have to update them before issuing the report o Auditors MUST include transactions testing throughout the year - Regulatory base for auditing IC o SOX 404 o PCAOB AS – An Audit of Internal Control Over Financial Reporting That is Integrated with an Audit of Financial Statements AS 4 – Reporting on Whether a Previously Reported Material Weakness Continues to Exist - Audits post SOX 404 o Auditors Should evaluate management’s assessment process Obtain understanding of IC Much more extensive for audit of IC than F/S
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This note was uploaded on 08/22/2011 for the course ACIS 3414 taught by Professor Yardley during the Spring '08 term at Virginia Tech.

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Audit Final - Auditing Internal Controls - Internal...

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