Auditing Internal Controls

Auditing Internal Controls - Auditing Internal Controls...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style 8/22/11 Auditing Internal Controls
Background image of page 1

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

View Full Document Right Arrow Icon
8/22/11 Internal controls 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
Background image of page 2
8/22/11 Audits prior to SOX 404 {19871D20-C89 -49C4-8B97-C9A2DFE56D50} Organization for accounting mation risk r audit/assurance IC ernal audit ectly (substantive) ne indirectly ce)
Background image of page 3

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

View Full Document Right Arrow Icon
Audits prior to SOX 404 Choice of strategy depends on: Existence of IC Perceived quality of IC Cost/benefit analysis (effectiveness and efficiency) Test of controls vs. substantive tests Tests Assertion Controls Procedure Substantive test Authorization n/a Inquiry, inspection of documents, signatures Test of controls Authorization Segregation of duties Observe segregation of duties, inquiry
Background image of page 4
8/22/11 Audits post SOX 404 {CE8 F1F8-F171-4B9D-BE48-39134E5F0DAD} sponsibility FECTIVENESS OF INTERNAL CONTROLS {C7C803FD-8C18-4E1F-9FD1-12D9E730C2A7} Accept responsibility {F52EC3C8-3CB8-41C4-A5FC-F9F6031B81D3} Evaluate effectiveness of IC over financi {32170296-F61E-4F40-9E 5-3D170F285B85} Auditor’s responsibility AUDIT IC (provides more assurance than a F/S audit on its own) asonable assurance on the financial statements ectiveness of IC over financial reporting h documentation {0EBC645C-E96C-42A1-BA8F-245D9 6B074F} Present written assessment as of year end ccompany the F/S aterial misstatements rial control weaknesses
Background image of page 5

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

View Full Document Right Arrow Icon
8/22/11 Audits post SOX 404 The audit of IC has to be approved by audit committee Auditors can use the work of others (internal auditors) Auditors can obtain evidence on IC operating effectiveness at any point of time but have to update them before issuing the report
Background image of page 6
8/22/11 Regulatory base for auditing IC SOX 404 PCAOB AS 5 - An Audit of Internal Control Over Financial Reporting That is Integrated with an Audit of Financial Statements Supersedes AS 2 for interested check out www.pcaob.com AS 4 - Reporting on Whether a
Background image of page 7

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

View Full Document Right Arrow Icon
8/22/11 Audits post SOX 404 Auditors: Should evaluate management’s assessment process Obtain understanding of IC Much more extensive for audit of IC than F/S audit Test both operating and design effectiveness of IC Operating effectiveness – how well are
Background image of page 8
8/22/11 Audit of IC process Plan the audit Gain understanding of client’s processes and IC Use of flowcharts; narratives; internal control questionnaires Assess control risk (as part of the overall RMM assessment) Identify significant accounts and assertions for each significant account
Background image of page 9

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

View Full Document Right Arrow Icon
8/22/11 Audit of IC process Perform the audit Perform walkthroughs – at least 1 walkthrough for each significant process each year Identify points where errors/frauds can occur Identify significant processes and existing internal controls Use of control risk matrix
Background image of page 10
8/22/11 Audit of IC process – performing the audit
Background image of page 11

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

View Full Document Right Arrow Icon
Image of page 12
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 28

Auditing Internal Controls - Auditing Internal Controls...

This preview shows document pages 1 - 12. Sign up to view the full document.

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