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Lecturer_5__Chapter_6.7_Internal_Control - Chapter 6-7...

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Internal Control in a FinancialStatement AuditChapter6-7Statement AuditInstructor: Le Phuong Thao, MBASchool of BusinessInternational University
ObjectivesDescribe the 3 primary objectives of effective internal controlContrast management’s responsibilities with the auditor’sresponsibilities for internal controlsUnderstand the five components of the COSO internal controlframeworkObtain and document an understanding of internal controlUnderstandthe process of designing and performing tests ofcontrols
Internal control systemA system of internal control consists ofpoliciesandproceduresdesigned to providemanagement withreasonable assurancethat thecompany achievesits objectives and goals.
Internal ControlObjectivesReliability ofFinancialReportingEffectiveness& Efficiency ofOperationsCompliancewith Laws &Regulations
Management and Auditor ResponsibilitiesRelated to Internal Controlhead2rightManagement’s responsible forhead2rightDesigning & establishing internal controlhead2rightOperating effectiveness of controlshead2rightAuditor’s responsible forhead2rightUnderstanding internal controlhead2rightTesting internal control
Five Components of Internal ControlControl EnvironmentRiskassessmentControlactivitiesInformation andcommunicationMonitoring
The Control EnvironmentThe control environment consists of theactions, policies, andproceduresthat reflect theoverall attitudesoftopmanagement,directors, and ownersof an entity about internal control and itsimportance to the entity.1.Integrity and ethical values2.Commitment to competence3.Board of directors or audit committee participation4.Management’s philosophy and operating style5.Organizational structure6.Assignment of authority and responsibility7.Human resource policies and procedures
Five Components of Internal ControlControl EnvironmentRiskassessmentControlactivitiesInformation andcommunicationMonitoring
Risk AssessmentIdentify factors that may increase riskChange in the operating environment

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Term
Spring
Professor
Hiendang
Tags
Understanding of Internal Control

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