5 effective control demands that a balance be

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5. Effective control demands that a balance be maintained: i) Between autonomy and integration—Keeping this balance often involves shifting between centralization and decentralization and between imposing constraints to achieve consistency and granting freedom to act. ii) Between the status quo and adapting to change—Keeping this balance often involves shifting between demanding greater consistency to gain efficiency and granting greater flexibility to respond to change. Perhaps the most important features of the guidelines are the twenty control criteria they identify. They are quite detailed but can be summarized by the following categories or components: 1. Purpose groups criteria, which provide a sense of the organization’s direction: objectives (including mission, vision, and strategy) risks (and opportunities) policies planning performance targets and indicators 2. Commitment groups criteria, which provide a sense of the organization’s identity and values: ethical values, including integrity human resource policies authority, responsibility, and accountability mutual trust 11 The governing body of a government or not-for-profi t entity may be called by a different name. In a unit within an organization, the equivalent to the board of directors is the senior management or other leadership group.
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CHAPTER 16 Other Public Accounting Services and Reports 643 3. Capability groups criteria, which provide a sense of the organization’s competence: knowledge, skills, and tools communication processes information coordination control activities 4. Monitoring and learning groups criteria, which provide a sense of the organization’s evolution: monitoring internal and external environments monitoring performance challenging assumptions reassessing information needs and information systems follow-up procedures assessing the effectiveness of control The basic control framework consists of the definition of control and the criteria as summarized by the broad categories. Response so far has been favourable toward the criteria. They are consistent with the Canadian philosophy of developing guidelines that are not so detailed that they resemble a “cookbook” for evaluating controls. The deliberately high level of the criteria allow them to be applied to all systems at all organizations. There is scope for experimentation and creativity with them, and auditors will have to use considerable professional judgment in applying the criteria to specific situations. The United States has an equivalent document titled “Internal Control—An Integrated Framework,” or COSO . Although COCO and COSO share the objective of providing guidance for control and criteria for control, COCO builds on COSO by expanding the concept of control and taking a particularly people-oriented approach towards it.
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  • Fall '12
  • Smith
  • Accounting, Accountant, Auditor's report, CICA Handbook

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