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

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  • 1. Internal control in financial statement audit
  • 2. 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
  • 3.
    • Understand COSO framework for the client
    • 4. General
    • 5. Control environment
    • 6. Risk assessment
    • 7. Financial Reporting
    • 8. Posting
    • 9. Adjusting entries
    • 10. Financial report prep
    • 11. General IT controls
    • 12. System software management
    • 13. Access security
    • 14. Networking and infrastructure
    • 15. Application system management
    • 16. Monitoring internal controls
    • 17. Application or transaction level
    • 18. Information and communication
    • 19. Initiation, authorization, recording, processing, and reporting
    • 20. Accounting records
    • 21. Control Activities
    • 22. IT application controls
    • 23. Limitations of internal control
    • 24. Override
    • 25. Collusion
    • 26. Error
    Assess Control Risk
  • 27. Assess Control Risk
    Rely upon controls
    Substantive strategy
    Extent of testing depends on detection risk
  • 28. 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
  • 29. 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
    Timing of testing depends on strategy and detection risk
  • 34. 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.