Internal control in financial statement audit
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Internal control in financial statement audit

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Internal control in financial statement audit Internal control in financial statement audit Presentation Transcript

  • Internal control in financial statement audit
  • Barker Group interview on Tuesday
    Find information to assess overall inherent risk
    Understand line items on financial statements
    Find information to assess overall control risk
    • Understand COSO framework for the client
    • General
    • Control environment
    • Risk assessment
    • Financial Reporting
    • Posting
    • Adjusting entries
    • Financial report prep
    • General IT controls
    • System software management
    • Access security
    • Networking and infrastructure
    • Application system management
    • Monitoring internal controls
    • Application or transaction level
    • Information and communication
    • Initiation, authorization, recording, processing, and reporting
    • Accounting records
    • Control Activities
    • IT application controls
    • Limitations of internal control
    • Override
    • Collusion
    • Error
    Assess Control Risk
  • Assess Control Risk
    Rely upon controls
    Substantive strategy
    Extent of testing depends on detection risk
  • Assess Control Risk
    Rely upon controls
    Substantive strategy
    Reliance strategy
    Identify control upon which you rely for an assertion
    Test Controls
    Conclude on achieved level of control
  • Assess Control Risk
    Rely upon controls
    Substantive strategy
    Reliance strategy
    Identify control upon which you rely for an assertion
    Test Controls
    Conclude on achieved level of control
    • Walkthrough
    • Inquiry
    • Observe
    • Inspect documents and records
    • Reperformance
  • Assess Control Risk
    Rely upon controls
    Substantive strategy
    Reliance strategy
    Timing of testing depends on strategy and detection risk
  • Communication of control deficiencies
    Control deficiency:
    does not prevent or detect and correct a misstatement
    Significant deficiency
    Important enough to merit attention
    Material weakness
    Reasonable possibility that a material misstatement will not be prevented or detected and corrected
    Significant deficiencies and material weaknesses are reported to management and board.