Auditing SP 2008 CH 10 Outline

Auditing and Assurance Services (12th Edition)

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Objectives of I/C 1. Reliability of Financial Reporting – mgt is responsible! 3. Compliance with Laws & Regulations Sec 4-4 requires mgt to report on effectiveness of I/C’s. See example of report on pg 292 figure 10-1. The auditor is responsible for understanding & testing the internal controls over financial reporting. Auditors must also emphasize controls over classes of transactions as opposed to account balances. Incorrect input = incorrect output. So, it’s better if we can rely on the I/C’s. The Control Environment – Summarized in Table 10-2, pg 303: Risk Assessment – mgt identifies and analysis risks relevant to the preparation of F/S’s in conformity with GAAP. Auditors assess risk to determine the amount of evidence it must gather! Control Activities – the policies & procedures that help ensure that necessary actions are
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: taken to address risks in the achievement of the entity’s objectives. 1. Separation of duties (pg 298) 2. Proper authorization of transactions & activities 3. Adequate documents & records 4. Physical control over assets and records 5. Independent checks on performance Information & Communication – initiate, record, process, and report the entity’s transactions and to maintain accountability over the related assets. Monitoring – ongoing assessment of the quality of I/C’s by management to determine that controls are operating as intended and modified if need be. Obtaining and Documenting I/C See pg 304 Figure 10-3 Fig 10-4 pg 306- Questionnaire Fig 10-5 pg 309 – Risk Matrix Table 10-3 pg 315 – Types of Tests of Controls Plan Substantive Tests- (Tests of Balances)...
View Full Document

This document was uploaded on 04/07/2008.

Ask a homework question - tutors are online