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Internal control in financial statement audit
Internal control in financial statement audit
Internal control in financial statement audit
Internal control in financial statement audit
Internal control in financial statement audit
Internal control in financial statement audit
Internal control in financial statement audit
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<br />
  • 2. Barker Group interview on Tuesday<br />Find information to assess overall inherent risk<br />Understand line items on financial statements<br />Find information to assess overall control risk<br />
  • 3. <ul><li>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</li></ul>Assess Control Risk<br />
  • 27. Assess Control Risk<br />Rely upon controls<br />Substantive strategy<br />Extent of testing depends on detection risk<br />
  • 28. Assess Control Risk<br />Rely upon controls<br />Substantive strategy<br />Reliance strategy<br />Identify control upon which you rely for an assertion<br />Test Controls<br />Conclude on achieved level of control<br />
  • 29. Assess Control Risk<br />Rely upon controls<br />Substantive strategy<br />Reliance strategy<br />Identify control upon which you rely for an assertion<br />Test Controls<br />Conclude on achieved level of control<br /><ul><li>Walkthrough
  • 30. Inquiry
  • 31. Observe
  • 32. Inspect documents and records
  • 33. Reperformance</li></li></ul><li>Assess Control Risk<br />Rely upon controls<br />Substantive strategy<br />Reliance strategy<br />Timing of testing depends on strategy and detection risk<br />
  • 34. Communication of control deficiencies<br />Control deficiency: <br />does not prevent or detect and correct a misstatement<br />Significant deficiency<br />Important enough to merit attention<br />Material weakness<br />Reasonable possibility that a material misstatement will not be prevented or detected and corrected<br />Significant deficiencies and material weaknesses are reported to management and board.<br />

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