2. What you need to do
• Process memo
– Understand for investing and cash each
• Account
• Business Process (initiate, authorize, process, record, report)
– Understand internal controls at entity and transaction level
• Testing plan
– Identify management assertions
– Assess inherent risk, control risk, and detection risk at
assertion level
– Design tests of controls (nature and extent)
– Design substantive tests (nature and extent)
– Use a logical organization for your workpapers
Accounting 492
Audit
3. Evaluating controls – control matrix for a
process
Segregation of Authorization Documentation Independent
duties verification
Occurrence
Completeness
Authorization
Accuracy
Cutoff
Classification
Accounting 492
Audit
5. Organization Chart
Board of
Directors
Director
Risk Officer
BTCM Individual
Dan 550 Wells Fargo Foundation
(Class) Traders
Accounting 492
Audit
6. Transfer of funds
Investors
Legal 11,374
36,426
Fees
Wells Fargo 30,000 Foundation
68,834 19,962 Seminar
23,000 20,512
Trading 5,700
Accounts (15) Dan 550
424,491 (5,682)
24,056
Operational
Expenses
Accounting 492
Audit
7. Business Process – Class Account
Investment Portfolio
Committees Financial
Officer reviewed
suggest Transactions reports
executes and
investment/ recorded by based on
trades on balanced by
class brokerage brokerage
Think or Director and
approves reports
Swim Risk Officer
Accounting 492
Audit
8. Business Process – Individual accounts
Portfolios
Financial
Investment reviewed
Trader Transactions reports
parameters and
executes recorded by based on
set by balanced by
trades brokerage brokerage
director director and
reports
risk officer
Accounting 492
Audit
9. Business Process – Operating costs
Disbursements
Budget Dean is
Expenses authorized by
approved by signatory on
submitted to Dean’s
Board of checking
Dean’s office assistant based
Directors account
on budget
Accounting 492
Audit
