This document provides an overview and examples of SAS 112, which establishes requirements for communicating internal control deficiencies identified during an audit. It defines key terms like control deficiency, significant deficiency, and material weakness. It discusses how auditors evaluate the severity of control deficiencies based on factors like potential misstatement, likelihood, and magnitude. Examples are provided of common control deficiencies as well as indicators of material weaknesses. Methods for strengthening internal controls over areas like cash, payroll, purchases are also outlined.
The document discusses various concepts related to auditing, including control risk, inherent risk, detection risk, internal controls, substantive tests, and revenue recognition. It provides definitions and examples for these terms. For instance, it defines control risk as the risk that a misstatement will not be prevented or detected by internal controls. It also gives examples of improper revenue recognition schemes and discusses testing controls related to the revenue cycle.
Yes, it is possible to give an adverse opinion on internal controls and an unqualified opinion on the financial statements.
The key factors that allow for this are:
1. The material weakness in internal controls relates specifically to the valuation process and oversight of a particular portfolio, not broader internal controls.
2. The auditors considered the material weakness in determining their audit approach but still obtained sufficient appropriate audit evidence to issue an unqualified opinion on the financial statements.
3. Management is responsible for the financial statements and internal controls, and the adverse internal controls opinion does not affect the auditors' opinion on the financial statements.
So in summary, while a material weakness in internal controls was identified, it did not per
Operational risk is the risk of loss from failed internal processes, people, systems or external events. It is embedded in all bank activities and processes. Major types of operational risk include internal and external fraud, workplace issues, damage to physical assets, business disruptions, client/product issues, and legal risks. Common operational risk events in banking include losses from internal fraud, external fraud, improper sales practices, physical damage, system failures, and failed transaction processing. The document outlines approaches for quantifying and measuring operational risk, including the Basic Indicator Approach, Standardized Approach, and Advanced Measurement Approach. The Advanced Measurement Approach, which uses internal loss data and assessment methods, is most beneficial for banks.
The Importance of Internal Controls in Fraud Prevention Rea & Associates
Presentation made by Ohio Accounting Firm, Rea & Associates, on the how strong internal controls can help Ohio companies deter fraud in the workplace. Special attention is given to the 5 components of internal controls and how to diffuse the traingle of fraud.
This document summarizes SAS 112 and its provisions for communicating internal control deficiencies identified during an audit. Key points include: SAS 112 requires auditors to communicate significant deficiencies and material weaknesses in writing; it provides new definitions for control deficiencies, significant deficiencies, and material weaknesses; and it changes the landscape by eliminating the option for non-written communication of internal control issues. The Legislative Auditor expects more findings to be reported and repeated annually until deficiencies are corrected. Resources provided to understand and implement SAS 112 include the SAS itself and an AICPA Audit Risk Alert.
This document discusses operational risk management. It begins by defining risk management and the types of risks, including operational risk. It then discusses why operational risk management is important, highlighting some significant operational risk events. It describes tools for identifying and monitoring operational risk, such as loss data collection, risk and control self-assessments, and key risk indicators. It also discusses approaches for measuring operational risk capital requirements under Basel II and III, including the basic indicator approach, standardized approach, and advanced measurement approach. Finally, it notes some challenges in measuring operational risk and ways to mitigate and control operational risk exposures.
Embedding compliance: how to integrate sarbanes-oxley in your projects3gamma
Internal controls are incredibly important to business operations but are often seen as something abstract and separate while they in fact should be part of business as usual and all ongoing development activities. Trying to resolve and remedy a lack of internal controls as a separate, post-event activity is not only risky – it’s also expensive. Control and assurance must be based on the business risk, be in line with external rules and regulations and be built in from the start.
The document discusses various concepts related to auditing, including control risk, inherent risk, detection risk, internal controls, substantive tests, and revenue recognition. It provides definitions and examples for these terms. For instance, it defines control risk as the risk that a misstatement will not be prevented or detected by internal controls. It also gives examples of improper revenue recognition schemes and discusses testing controls related to the revenue cycle.
Yes, it is possible to give an adverse opinion on internal controls and an unqualified opinion on the financial statements.
The key factors that allow for this are:
1. The material weakness in internal controls relates specifically to the valuation process and oversight of a particular portfolio, not broader internal controls.
2. The auditors considered the material weakness in determining their audit approach but still obtained sufficient appropriate audit evidence to issue an unqualified opinion on the financial statements.
3. Management is responsible for the financial statements and internal controls, and the adverse internal controls opinion does not affect the auditors' opinion on the financial statements.
So in summary, while a material weakness in internal controls was identified, it did not per
Operational risk is the risk of loss from failed internal processes, people, systems or external events. It is embedded in all bank activities and processes. Major types of operational risk include internal and external fraud, workplace issues, damage to physical assets, business disruptions, client/product issues, and legal risks. Common operational risk events in banking include losses from internal fraud, external fraud, improper sales practices, physical damage, system failures, and failed transaction processing. The document outlines approaches for quantifying and measuring operational risk, including the Basic Indicator Approach, Standardized Approach, and Advanced Measurement Approach. The Advanced Measurement Approach, which uses internal loss data and assessment methods, is most beneficial for banks.
The Importance of Internal Controls in Fraud Prevention Rea & Associates
Presentation made by Ohio Accounting Firm, Rea & Associates, on the how strong internal controls can help Ohio companies deter fraud in the workplace. Special attention is given to the 5 components of internal controls and how to diffuse the traingle of fraud.
This document summarizes SAS 112 and its provisions for communicating internal control deficiencies identified during an audit. Key points include: SAS 112 requires auditors to communicate significant deficiencies and material weaknesses in writing; it provides new definitions for control deficiencies, significant deficiencies, and material weaknesses; and it changes the landscape by eliminating the option for non-written communication of internal control issues. The Legislative Auditor expects more findings to be reported and repeated annually until deficiencies are corrected. Resources provided to understand and implement SAS 112 include the SAS itself and an AICPA Audit Risk Alert.
This document discusses operational risk management. It begins by defining risk management and the types of risks, including operational risk. It then discusses why operational risk management is important, highlighting some significant operational risk events. It describes tools for identifying and monitoring operational risk, such as loss data collection, risk and control self-assessments, and key risk indicators. It also discusses approaches for measuring operational risk capital requirements under Basel II and III, including the basic indicator approach, standardized approach, and advanced measurement approach. Finally, it notes some challenges in measuring operational risk and ways to mitigate and control operational risk exposures.
Embedding compliance: how to integrate sarbanes-oxley in your projects3gamma
Internal controls are incredibly important to business operations but are often seen as something abstract and separate while they in fact should be part of business as usual and all ongoing development activities. Trying to resolve and remedy a lack of internal controls as a separate, post-event activity is not only risky – it’s also expensive. Control and assurance must be based on the business risk, be in line with external rules and regulations and be built in from the start.
Operational Risk Management Under Basel II & Basel IIIEneni Oduwole
This presentation discusses operational risk under Basel II and III. It provides an overview of the evolution of Basel guidelines and the focus of the Basel II framework on providing capital standards for banks to mitigate financial and operational risks. It defines operational risk and discusses the approaches to estimating capital - basic indicator, standardized, and advanced measurement. The presentation notes some pitfalls of Basel II and the focus of Basel III on increased capital requirements and liquidity standards. It addresses ongoing challenges in operational risk management and potential improvements.
Internal controls over financial reporting and internal audit are often unpopular but necessary to avoid unpleasant surprises. To maintain effective controls, companies must identify key business risks, install controls to prevent or detect issues, and promote transparency and shared understanding of business and reporting processes across departments. Without buy-in from both business and finance staff, controls become counterproductive burdens rather than facilitators of reliable reporting.
The document discusses operational risk management in banks. It defines operational risk as the risk of loss from inadequate or failed internal processes, people, and systems or from external events. It lists the objectives of operational risk management as identification, assessment, monitoring and control/mitigation of this risk. The risk management process involves identifying, assessing, monitoring and controlling/mitigating operational risks like people risk, process risk, and IT risk through methods such as risk assessment surveys, key risk indicators, policies and procedures, internal controls, and risk transfer.
The document outlines the key steps in initial audit planning:
1. Accept the client and perform initial planning including client acceptance procedures, engagement letter, and staff selection.
2. Understand the client's business and industry by learning about operations, management, objectives, and the external environment.
3. Assess client business risk by evaluating sources of risk that could influence the client to misstate financials.
4. Perform preliminary analytical procedures to evaluate the client's financial health using ratios that assess short-term debt paying ability, liquidity, long-term debt obligations, and profitability.
The document discusses the differences and relationships between fraud and error in accounting. It notes that fraud is intentional while error can occur due to misinterpretation or incorrect accounting. Management has primary responsibility for preventing and detecting fraud and establishing proper internal controls and corporate governance. Auditors are responsible for obtaining reasonable assurance about whether the financial statements are free of material misstatement due to fraud or error. If fraud is suspected, auditors should perform additional testing, discuss with management, and consider reporting and legal impacts. The document also covers auditor responsibilities and potential criminal and civil liabilities related to negligence.
Audit risk is the risk that an auditor will provide an inappropriate audit opinion when the financial statements contain material misstatements. Audit risk has three components: inherent risk, control risk, and detection risk. Inherent risk is the possibility of material misstatements in the financial statements due to factors like complex accounting issues or assets susceptible to theft. Control risk is the possibility that misstatements will not be prevented or detected by internal controls. Detection risk is the possibility that audit procedures will fail to detect material misstatements. The auditor determines an acceptable level of overall audit risk.
This document discusses tests of controls, which are used in SOC examinations to confirm that identified controls at a service organization are working effectively. There are five main methods for testing controls: inquiry, observation, examination of evidence, re-performance, and computer-assisted audit techniques. Inquiry involves asking questions, observation involves watching activities, examination of evidence involves reviewing documentation, re-performance involves redoing controls manually, and computer-assisted techniques use software to analyze large volumes of data. Audit sampling for tests of controls also falls into four categories: inquiry, observation, reperformance, and inspection of documents.
This document defines and compares subsequent events and after balance sheet events. It discusses the differences between them, provides examples of types of each, and outlines the auditor's procedures to identify subsequent events. It also reviews audit working papers, evaluates audit results, and ensures proper disclosures and compliance. The document describes communications between the auditor and client, including engagement letters, attorney response letters, and management letters.
The document outlines strategies for implementing an effective anti-fraud program, including establishing governance, conducting fraud risk assessments, implementing prevention and detection controls, investigating fraud allegations, and taking corrective actions. It discusses benchmarking existing anti-fraud activities, defining roles and responsibilities, identifying key risk categories and schemes, measuring risks, and prioritizing next steps such as obtaining management buy-in and continuously improving prevention and detection efforts. The overall goal is to prevent, detect, and address fraud through a formal, collaborative anti-fraud program.
Outsourcing GIA Accounting whitepaper 2016Rich Lawrence
This document discusses the considerations for insurance companies in outsourcing their general investment account (GIA) accounting functions. It explores the unique requirements of GIA accounting, including complex assets, multi-basis accounting, statutory reporting, and SOX compliance. When making the outsourcing decision, all current processes must be well-documented and understood. The potential benefits of outsourcing include cost savings and efficiency gains, but it also brings new risks that require oversight. The document analyzes the pros and cons of outsourcing GIA accounting functions.
There are several types of audits that can be performed on an organization. Internal audits are conducted by an organization's internal audit team to evaluate risks, controls, and opportunities for improvement. External audits are performed by an independent third party like an accounting firm to provide objective assurance to stakeholders. Financial statement audits involve auditing a company's financial records and statements to ensure compliance with standards. Performance, operational, payroll, compliance, information system, employee benefit plan, single, and forensic audits each have a specific focus area that provides insights to improve an organization's operations, controls, compliance, and identification of issues.
Crowe AML Model Risk Management WhitepaperBrett Rosynek
The document outlines the six critical components of an effective anti-money laundering (AML) model risk management program for financial institutions:
1. Model inventory
2. Model development, implementation, and use
3. Model tuning and optimization
4. Model valuation
5. Model governance
6. Model foundation
It discusses how regulators are holding AML models to the same standards as other risk models, requiring financial institutions to implement a formal model risk management framework. This framework must incorporate the three core components of model development, validation, and governance. The document also notes some of the challenges financial institutions face in adapting their existing AML compliance programs to meet these new regulatory expectations and model risk management requirements
This document provides guidance on developing and implementing a fraud risk assessment. It outlines a 5-step process for fraud risk assessments: 1) identify specific fraud risks, 2) analyze and assess risks, 3) present the assessment, 4) plan and implement mitigation solutions, and 5) continuously monitor. It emphasizes tailoring the assessment to an organization's needs, presenting risks in a clear and understandable way, using existing tools like audit plans and continuous monitoring to detect risks, and treating the assessment as an ongoing process rather than a one-time report. The overall goal is to implement an effective anti-fraud program through collaborative fraud risk assessment and proactive mitigation efforts.
The 2nd seminar of Friends4Growth in Ho Chi Minh city with Prof. Enoch Ch'ng from SMU - Singapore Management University.
Friends4Growth
Together We Grow
--------------------------------------------------
Friends4Growth is a group of young professionals, who share a common passion to learn and grow more in their career through formal and informal educational opportunities. The group was founded by Vietnamese national Le Tran, a Wharton MBA Class of 2009.
The Friends4Growth mission is as follows:
- Be a place for young professionals to exchange and enhance knowledge
- Bring educational opportunities to members by providing access to well-known professors, business leaders and industry experts
- Provide information of universities around the world to members with intention to study abroad
- Share experience in studying, job search, working and living outside Vietnam
To achieve its mission, the group organizes various activities on a monthly basis to its members, such as:
- Seminars on various industry topics, with a sponsorship of the Singapore Management University.
- Coffee chats with experienced professionals from more developed economies
- Q&A sessions covering overseas life and work from seasoned experts
Website: www.friends4growth.com
Join us at: http://facebook.com/friends4growth and http://vn.linkedin.com/in/friends4growth
If you have any inquiry, please contact us at info@friends4growth.com
Brennan, Niamh [2003] Accounting in crisis: A story of auditing, accounting, ...Prof Niamh M. Brennan
Recent accounting scandals are the product of multiple failings of auditing, accounting, corporate governance and of the market. In discussing the many factors that led to failure, this paper attempts to provide insights on regulatory inadequacies that contributed to these problems. At the centre is human failure – in particular greed and weakness. Reforms in progress are briefly examined, with the caveat that no reforms will ever fully cater for human weakness.
The document discusses the circumstances under which an auditor may need to resign from an audit engagement before completion. It outlines that resignation is a last resort that requires careful consideration. There are professional standards and legal requirements that must be followed. The auditor must communicate openly with the client and fully document the reasons for withdrawal. Withdrawing from an audit is a difficult decision that depends on factors like the audit's stage of completion and whether laws allow resignation without completing the audit.
Binary Scam Watch Monitor controls Credit Card Fraud (Overcharging): The classic and most vile tactic is to overcharge your credit card. The better brokers have a very strong compliance department which forbids this, but some of the shady ones like Optionmint, Zenith Options, Cedar Finance, safe24options, Traderxp, Optimarkets, XPMarkets, Amber Options, Regal Options or Interactive Option will over charge you left and right.
The document discusses the audit risk model, which states that audit risk (AR) is equal to inherent risk (IR) multiplied by control risk (CR) multiplied by detection risk (DR). It defines each component of the model. It also discusses how the different risk components are assessed and interrelated, how internal controls objectives are designed to prevent and detect misstatements, and the importance of risk assessment in an organization's internal controls.
Anytime, Anywhere Approach To Social Mediaguest8143e
Presented at Social Networking Conference Windows Consumer marketing perspective on Social Media and how we use it everyday to connect with customers and share our brand.
The document provides an overview of Symbian OS, including:
- Symbian OS is an open, mobile operating system designed for battery-powered devices. It provides robustness, stability and low power consumption.
- The OS layers include the user interface, core system services, and hardware interface layers. It supports various UI designs like Series 60 and UIQ.
- The platform has evolved over time with new versions adding features like multimedia enhancements, graphics acceleration, security improvements and support for additional devices and networks.
Operational Risk Management Under Basel II & Basel IIIEneni Oduwole
This presentation discusses operational risk under Basel II and III. It provides an overview of the evolution of Basel guidelines and the focus of the Basel II framework on providing capital standards for banks to mitigate financial and operational risks. It defines operational risk and discusses the approaches to estimating capital - basic indicator, standardized, and advanced measurement. The presentation notes some pitfalls of Basel II and the focus of Basel III on increased capital requirements and liquidity standards. It addresses ongoing challenges in operational risk management and potential improvements.
Internal controls over financial reporting and internal audit are often unpopular but necessary to avoid unpleasant surprises. To maintain effective controls, companies must identify key business risks, install controls to prevent or detect issues, and promote transparency and shared understanding of business and reporting processes across departments. Without buy-in from both business and finance staff, controls become counterproductive burdens rather than facilitators of reliable reporting.
The document discusses operational risk management in banks. It defines operational risk as the risk of loss from inadequate or failed internal processes, people, and systems or from external events. It lists the objectives of operational risk management as identification, assessment, monitoring and control/mitigation of this risk. The risk management process involves identifying, assessing, monitoring and controlling/mitigating operational risks like people risk, process risk, and IT risk through methods such as risk assessment surveys, key risk indicators, policies and procedures, internal controls, and risk transfer.
The document outlines the key steps in initial audit planning:
1. Accept the client and perform initial planning including client acceptance procedures, engagement letter, and staff selection.
2. Understand the client's business and industry by learning about operations, management, objectives, and the external environment.
3. Assess client business risk by evaluating sources of risk that could influence the client to misstate financials.
4. Perform preliminary analytical procedures to evaluate the client's financial health using ratios that assess short-term debt paying ability, liquidity, long-term debt obligations, and profitability.
The document discusses the differences and relationships between fraud and error in accounting. It notes that fraud is intentional while error can occur due to misinterpretation or incorrect accounting. Management has primary responsibility for preventing and detecting fraud and establishing proper internal controls and corporate governance. Auditors are responsible for obtaining reasonable assurance about whether the financial statements are free of material misstatement due to fraud or error. If fraud is suspected, auditors should perform additional testing, discuss with management, and consider reporting and legal impacts. The document also covers auditor responsibilities and potential criminal and civil liabilities related to negligence.
Audit risk is the risk that an auditor will provide an inappropriate audit opinion when the financial statements contain material misstatements. Audit risk has three components: inherent risk, control risk, and detection risk. Inherent risk is the possibility of material misstatements in the financial statements due to factors like complex accounting issues or assets susceptible to theft. Control risk is the possibility that misstatements will not be prevented or detected by internal controls. Detection risk is the possibility that audit procedures will fail to detect material misstatements. The auditor determines an acceptable level of overall audit risk.
This document discusses tests of controls, which are used in SOC examinations to confirm that identified controls at a service organization are working effectively. There are five main methods for testing controls: inquiry, observation, examination of evidence, re-performance, and computer-assisted audit techniques. Inquiry involves asking questions, observation involves watching activities, examination of evidence involves reviewing documentation, re-performance involves redoing controls manually, and computer-assisted techniques use software to analyze large volumes of data. Audit sampling for tests of controls also falls into four categories: inquiry, observation, reperformance, and inspection of documents.
This document defines and compares subsequent events and after balance sheet events. It discusses the differences between them, provides examples of types of each, and outlines the auditor's procedures to identify subsequent events. It also reviews audit working papers, evaluates audit results, and ensures proper disclosures and compliance. The document describes communications between the auditor and client, including engagement letters, attorney response letters, and management letters.
The document outlines strategies for implementing an effective anti-fraud program, including establishing governance, conducting fraud risk assessments, implementing prevention and detection controls, investigating fraud allegations, and taking corrective actions. It discusses benchmarking existing anti-fraud activities, defining roles and responsibilities, identifying key risk categories and schemes, measuring risks, and prioritizing next steps such as obtaining management buy-in and continuously improving prevention and detection efforts. The overall goal is to prevent, detect, and address fraud through a formal, collaborative anti-fraud program.
Outsourcing GIA Accounting whitepaper 2016Rich Lawrence
This document discusses the considerations for insurance companies in outsourcing their general investment account (GIA) accounting functions. It explores the unique requirements of GIA accounting, including complex assets, multi-basis accounting, statutory reporting, and SOX compliance. When making the outsourcing decision, all current processes must be well-documented and understood. The potential benefits of outsourcing include cost savings and efficiency gains, but it also brings new risks that require oversight. The document analyzes the pros and cons of outsourcing GIA accounting functions.
There are several types of audits that can be performed on an organization. Internal audits are conducted by an organization's internal audit team to evaluate risks, controls, and opportunities for improvement. External audits are performed by an independent third party like an accounting firm to provide objective assurance to stakeholders. Financial statement audits involve auditing a company's financial records and statements to ensure compliance with standards. Performance, operational, payroll, compliance, information system, employee benefit plan, single, and forensic audits each have a specific focus area that provides insights to improve an organization's operations, controls, compliance, and identification of issues.
Crowe AML Model Risk Management WhitepaperBrett Rosynek
The document outlines the six critical components of an effective anti-money laundering (AML) model risk management program for financial institutions:
1. Model inventory
2. Model development, implementation, and use
3. Model tuning and optimization
4. Model valuation
5. Model governance
6. Model foundation
It discusses how regulators are holding AML models to the same standards as other risk models, requiring financial institutions to implement a formal model risk management framework. This framework must incorporate the three core components of model development, validation, and governance. The document also notes some of the challenges financial institutions face in adapting their existing AML compliance programs to meet these new regulatory expectations and model risk management requirements
This document provides guidance on developing and implementing a fraud risk assessment. It outlines a 5-step process for fraud risk assessments: 1) identify specific fraud risks, 2) analyze and assess risks, 3) present the assessment, 4) plan and implement mitigation solutions, and 5) continuously monitor. It emphasizes tailoring the assessment to an organization's needs, presenting risks in a clear and understandable way, using existing tools like audit plans and continuous monitoring to detect risks, and treating the assessment as an ongoing process rather than a one-time report. The overall goal is to implement an effective anti-fraud program through collaborative fraud risk assessment and proactive mitigation efforts.
The 2nd seminar of Friends4Growth in Ho Chi Minh city with Prof. Enoch Ch'ng from SMU - Singapore Management University.
Friends4Growth
Together We Grow
--------------------------------------------------
Friends4Growth is a group of young professionals, who share a common passion to learn and grow more in their career through formal and informal educational opportunities. The group was founded by Vietnamese national Le Tran, a Wharton MBA Class of 2009.
The Friends4Growth mission is as follows:
- Be a place for young professionals to exchange and enhance knowledge
- Bring educational opportunities to members by providing access to well-known professors, business leaders and industry experts
- Provide information of universities around the world to members with intention to study abroad
- Share experience in studying, job search, working and living outside Vietnam
To achieve its mission, the group organizes various activities on a monthly basis to its members, such as:
- Seminars on various industry topics, with a sponsorship of the Singapore Management University.
- Coffee chats with experienced professionals from more developed economies
- Q&A sessions covering overseas life and work from seasoned experts
Website: www.friends4growth.com
Join us at: http://facebook.com/friends4growth and http://vn.linkedin.com/in/friends4growth
If you have any inquiry, please contact us at info@friends4growth.com
Brennan, Niamh [2003] Accounting in crisis: A story of auditing, accounting, ...Prof Niamh M. Brennan
Recent accounting scandals are the product of multiple failings of auditing, accounting, corporate governance and of the market. In discussing the many factors that led to failure, this paper attempts to provide insights on regulatory inadequacies that contributed to these problems. At the centre is human failure – in particular greed and weakness. Reforms in progress are briefly examined, with the caveat that no reforms will ever fully cater for human weakness.
The document discusses the circumstances under which an auditor may need to resign from an audit engagement before completion. It outlines that resignation is a last resort that requires careful consideration. There are professional standards and legal requirements that must be followed. The auditor must communicate openly with the client and fully document the reasons for withdrawal. Withdrawing from an audit is a difficult decision that depends on factors like the audit's stage of completion and whether laws allow resignation without completing the audit.
Binary Scam Watch Monitor controls Credit Card Fraud (Overcharging): The classic and most vile tactic is to overcharge your credit card. The better brokers have a very strong compliance department which forbids this, but some of the shady ones like Optionmint, Zenith Options, Cedar Finance, safe24options, Traderxp, Optimarkets, XPMarkets, Amber Options, Regal Options or Interactive Option will over charge you left and right.
The document discusses the audit risk model, which states that audit risk (AR) is equal to inherent risk (IR) multiplied by control risk (CR) multiplied by detection risk (DR). It defines each component of the model. It also discusses how the different risk components are assessed and interrelated, how internal controls objectives are designed to prevent and detect misstatements, and the importance of risk assessment in an organization's internal controls.
Anytime, Anywhere Approach To Social Mediaguest8143e
Presented at Social Networking Conference Windows Consumer marketing perspective on Social Media and how we use it everyday to connect with customers and share our brand.
The document provides an overview of Symbian OS, including:
- Symbian OS is an open, mobile operating system designed for battery-powered devices. It provides robustness, stability and low power consumption.
- The OS layers include the user interface, core system services, and hardware interface layers. It supports various UI designs like Series 60 and UIQ.
- The platform has evolved over time with new versions adding features like multimedia enhancements, graphics acceleration, security improvements and support for additional devices and networks.
This document provides an overview of SAS 104-111 and what they mean for the audit profession. It discusses the key changes and requirements of each standard, including a greater focus on risk assessment, better understanding of clients' internal controls, and clearly linking risk assessment to the nature and extent of audit procedures. It also provides tips for auditors on implementing the risk-based approach and for clients on preparing for an audit under the new standards to make the process more efficient.
This document summarizes Symbian OS data types including integers, text, Boolean, floating point values, TAny, and enumerations. It also discusses Symbian OS naming conventions for classes, variables, and functions.
The document is a job posting from iContract seeking online strategists, designers, and writers. For online strategists, it seeks candidates with 1-2 years of solving branding challenges and addressing demanding clients and deadlines. For designers, it seeks those with 1-2 years of making the web a less ugly place and improving ads. For writers, it seeks those with 1-2 years of charm and influencing people to make job descriptions appealing. Candidates should submit resumes under relevant titles to the provided email.
Acceleo - Let's start with an Android exampleJonathan Musset
--- Eclipse Con 2010 ---
Acceleo is a pragmatic implementation of the OMG* standard for code generation called MTL*. Still in incubation state, we plan to have Acceleo graduate for the next Eclipse simultaneous release (Helios).
Being an expert at code generation or Acceleo is not necessary to get started on your first code generator : using the Acceleo editor and the powerful features it exposes (completion, syntax highlighting, on-the-fly compilation, quick outline, ...), it is very easy to get started once you understand the most basic principles.
This talk presents both the MTL language and the Acceleo Development Toolkit which is provided in the M2T project. Beginners will learn what code generation, M2T, and Acceleo are, as well as how to use them on a concrete case-study. Acceleo addicts will discover the new standard syntax, new functionalities and techniques. We will give you enough of the basics to create your own code generation for a specific target system. We have chosen the Android platform as a target to show that we can also use Acceleo for mobile software.
Here is the talk agenda :
- Acceleo : What's that new code generation engine?
- Create an Android prototype and its corresponding model
- Initialize your code generation project from the prototype
- Editing your code generation file to make the Android prototype run
- Launching your code generation on another model example
- Packaging as an eclipse plug-in and for standalone usage
- Create new Android applications in few clicks
- How to override a specific behavior in the target environment
- On the developper side : How to make your own extensions with Acceleo?
We'll end the talk with other complex code generation examples made with Acceleo : EEF, UML to Java, Ecore to python, Migrating from a language to another...
*OMG : Object Management Group
*MTL : Model to Text Language
The Junior Special Life Policy from Shelter Life Insurance Company provides term life insurance coverage for children from infancy through age 26. For a single premium payment of $555, it offers a $20,000 policy. Alternatively, the premium can be paid monthly for 12 months. The policy also includes a guaranteed insurability rider, allowing the insured to purchase additional permanent life insurance between ages 25-40 without a health exam. This ensures the ability to acquire life insurance even if health issues arise before age 26.
The document contains quiz questions and solutions related to Chapter 7 on auditing internal controls. It addresses topics like the responsibilities of management and auditors in assessing internal controls over financial reporting, the objectives of internal control, and an auditor's responsibilities to consider fraud and errors. Key objectives of auditing internal controls are to form an opinion on their effectiveness in preventing material misstatements and to evaluate controls over financial statement disclosures. Auditors must test internal controls rather than rely solely on the work of others.
Texas Trial Lawyers Association Commercial Litigation Semi.docxtodd191
Texas Trial Lawyers Association
Commercial Litigation Seminar
October 12-13, 2006
Dallas, Texas
ISSUES IN ACCOUNTANT LIABILITY LITIGATION
ARISING FROM BUSINESS FAILURES
Rod Phelan
Baker Botts L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
[email protected]
512.953.6500
Gavin R. Villareal
Baker Botts L.L.P.
98 San Jacinto Blvd., Suite 1500
Austin, Texas 78701
[email protected]
512.322.2500
-1-
Issues in Accountant Liability Litigation arising from Business Failures
Rod Phelan
Gavin R. Villareal
I. INTRODUCTION
More than ever before, when a company fails, someone sues the auditor. The auditor is
the last man standing and, much of the time, a deep (enough) pocket. Sometimes the claim is that
the auditor actively participated in developing or concealing the activities that led to the
company’s failure. More common, though, is an allegation that the auditor's error was one of
omission – the auditor failed to detect a damaging practice that, had it been discovered in time,
could have been corrected. Frequently, these claims are brought by the bankruptcy trustee or the
trustee of a litigation trust to which, under a bankruptcy plan, the company’s claims have been
assigned for the benefit of creditors.
Although any number of factors may have contributed to a company's failure –
mismanagement; bad strategic decisions, industry downturns, competition, poor oversight by
boards of directors, even outright fraud by senior management – lawsuits against auditors
inevitably claim that had the auditors done their jobs properly, somebody somewhere would have
done something differently that would have somehow enabled the company to avoid bankruptcy.
This paper discusses issues that frequently arise in these cases.
II. In the wake of Enron, WorldCom, etc. . . .
The past five years have witnessed spectacular business failures amid allegations of
accounting improprieties. While the roles of public accountants are scrutinized more than ever
before, the climate for accountant liability litigation remains in flux. Officers and directors are
now held to high standards, and their responsibility for a company's problems ordinarily dwarfs
that of its auditors. The complexity of the accounting issues arising from business failures
complicates any attempt to draw parallels under other facts and circumstances. Fundamental
changes are occurring in the way businesses operate and are regulated, and these changes also
make suits against accountants more difficult. For instance:
Greater transparency in financial statements. In the wake of the big business collapses,
companies face growing pressure, both from regulators and the investing public, to ensure
transparency in financial reporting. (Reporting transparency refers to disclosure beyond that
required by accounting principles or regulatory requirements; it means disclosure of information,
both financial and nonfinancial, that assists the public in maki.
Assessing risks and internal controls trainingshifataraislam
This document provides an overview of assessing risks and internal controls for process owners. It discusses identifying risks within business processes and points where failures could occur. The document also covers internal control definitions, techniques, myths and facts. Process owners are responsible for acknowledging risks and controls within their processes, remedying deficiencies, and signing quarterly certifications. They should educate their personnel on requirements and reinforce internal focus on controls.
The document discusses internal audits conducted by companies of their own business operations. It states that internal audits are conducted professionally and objectively to provide management an unbiased view of company operations. They are often performed by outside agencies or privately hired internal auditors. Companies may have full internal audit staffs that continuously audit various operations. Auditors report to an audit committee overseen by the board of directors and make recommendations to management and the board. Most adjustments from internal audits relate to protecting employee privacy and sensitive intellectual property. All internal audits are announced while external audits may be unannounced. Affected departments are notified in writing before an internal audit and must provide requested documents.
1. The document outlines the syllabus for an auditing course, covering topics such as the meaning, objectives, and advantages of audits; types of audits; internal check systems; vouching of transactions; verification and valuation of assets and liabilities; auditing of limited companies, banking/insurance companies, and co-operative societies.
2. The units cover the definition and meaning of auditing, objectives of audits including primary objectives like determining reliability of financial statements and secondary objectives like detecting errors and frauds.
3. The types of audits discussed include statutory, non-statutory, and internal audits based on authority, as well as complete, partial, and other types based
This document outlines the key steps and considerations for conducting an integrated audit with a top-down, risk-based approach. It discusses:
1) Implementing a top-down, risk-based approach to identify significant accounts and risks of misstatement.
2) The need to document the audit process and rely on effective internal controls to reduce substantive testing.
3) The elements of an unqualified internal control report and how an adverse report is issued for material weaknesses.
4) The challenge of finding the most cost-effective way to obtain evidence and render opinions on financial statements and internal control effectiveness.
The document discusses the final stages of an audit, including assembling audit evidence, evaluating results, communicating findings, and completing the audit. It notes that auditors must evaluate audit evidence objectively, draft reports to communicate issues and conclusions, and ensure quality control procedures are followed to complete the audit properly. Post-audit responsibilities involve monitoring corrective actions, reviewing for subsequent events, and retaining workpapers for the required retention period.
The document is an internal audit report that identifies two control weaknesses at a company. The first weakness is that the internal auditors report directly to the CEO, compromising their independence and objectivity. The second weakness is that a machine operator's pay is contingent on production, increasing the risk of fraud. The report recommends the auditors report to the audit committee instead of the CEO to be independent. It also notes the fraud risk from the incentive-based pay system.
Auditor Independence And Financial StatementsNatasha Barnett
The document discusses auditor independence and its importance for ensuring the credibility of financial statements. It states that auditors must be independent and objective to provide an unbiased audit process and opinion. They need to carry out their work freely without influence from interested parties like managers or directors to avoid conflicts of interest. Major accounting scandals in the past negatively impacted the public's trust in auditors, as some auditors failed to identify issues or were paid off by clients. Maintaining independence is crucial for the auditing profession.
Professional skepticism plays an important role in auditing by requiring auditors to question documents and statements, assess evidence critically, look beyond the obvious, and pay close attention to potential fraud. In the case of Imperial Valley, the auditors likely lacked sufficient professional skepticism as they failed to detect major issues with the company's operations and financial reports over several years. Proper professional skepticism involves diligent, persistent scrutiny that could have uncovered Imperial Valley's misstatements earlier.
Short presentation on 'internal controls for the class IPOL 8530 'The Finance Function' in Social Change Organizations'. This class is part of the Master of Public Administration (MPA) program in the Graduate School of International Policy & Management at the Monterey Institute of International Studies (MIIS). Presentation created by Alfredo Ortiz Aragón, adjunct professor.
DEPARTMENT OF ACCOUNTING, TAXATION, AND LEGAL STUDIES IN...Beth Hall
Here are the key points regarding the independence of an external auditor:
- Auditor independence refers to the independence of the auditor from parties that may have a financial interest in the business being audited. Independence requires integrity and an objective approach.
- Independence is important to ensure the auditor can carry out their work freely and objectively. It enhances the credibility of the financial statements by providing reasonable assurance from an independent source that they present a true and fair view.
- There are three main types of independence - financial independence, management independence, and programming independence. Financial and management independence prevent conflicts of interest. Programming independence allows auditors freedom in their audit approach.
- Threats to independence include things like a non-audit
This document discusses audit planning tools used to guide audit work including preliminary risk assessment, materiality decisions, analytical procedures, and audit programs. It explains the audit risk model and how inherent risk, control risk, and detection risk contribute to overall audit risk. The document also covers preliminary assessment of materiality, analytical procedures used in audit planning, developing audit programs, evaluating internal controls, assessing control risk, and substantive testing procedures like confirmations and examining bank reconciliations.
Audit of Internal Financial Control over Financial Reporting (IFCR) A complet...Taufir Alam
Introduction to the Presentation on internal financial control over financial reporting_a complete guide
The Companies Act, 2013 has introduced some new requirements relating to audits and reporting by the statutory auditors of companies.
One of these requirements is given under Section 143(3)(i) of the Act which requires the statutory auditor to state in his audit report whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
The section has cast onerous responsibilities on the statutory auditors because reporting on internal financial controls is not covered under the Standards on Auditing issued by the ICAI.
Since the concept of reporting on internal financial controls is still new in India this new reporting requirement has thrown up many challenges for the members.
To help the members properly understand and perform the various aspects of this reporting responsibility, the Auditing and Assurance Standards Board of the Institute of Chartered Accountants of India has brought out this Guidance Note on Audit of Internal Financial Controls Over Financial Reporting.
The Guidance Note covers aspects such as Scope of reporting on internal financial controls under Companies Act 2013, essential components of internal controls, Technical guidance on the audit of Internal Financial Controls, Implementation guidance on the audit of Internal Financial Controls.
I have presented the above guidance note into a presentation that will have a complete guide for those who are planning to go for Audit of Internal financial control over financial reporting. this presentation will cover all the relevant aspects and also provide the standard operation process for the efficient conduct of the IFCR Audit. You don't need to read the complete Guidance note.
The audit committee plays an important role in overseeing the financial reporting process and audit of a company's financial statements. The key responsibilities of an audit committee include:
1. Overseeing and monitoring the financial reporting process to ensure accuracy and compliance.
2. Appointing, compensating, and overseeing the independent auditor.
3. Reviewing and discussing the audit plan, audit results, and auditor's report with the independent auditor.
4. Reviewing the adequacy of the company's internal controls and risk management procedures.
The audit committee helps provide oversight of management, the internal auditors, and the independent auditor to strengthen the integrity of financial reporting and maintain public trust in the
Here is a draft audit risk assessment report on Telstra Corporation Limited:
Audit Risk Assessment of Telstra Corporation Limited
Introduction
This report presents an audit risk assessment of Telstra Corporation Limited, one of Australia's largest telecommunications companies. The assessment identifies key risk areas that could impact the accuracy and reliability of Telstra's financial statements.
Industry Risks
As a telecommunications provider, Telstra faces risks common to the industry such as rapid technological changes, intense competition, and regulatory changes. These risks could impact Telstra's financial position and performance.
Audit Risk Model
The audit risk model identifies major risk areas for Telstra based on inherent, control, and detection risk. Key risks are discussed below.
Concept of Auditing B.Com(Hons)/B.Com .pdfUmakantAnnand
Concept of Auditing
The term audit is derived from a Latin word “audire” which means to hear authenticity of accounts is assured with the help of the independent review. Audit is performed to ascertain the validity and reliability of information. Examination of books and accounts with supporting vouchers and documents to detect and prevent error, fraud is the primary function of auditing. Auditor has to check the effectiveness of internal control systems for determining the extent of checking out the audit.Initially its meaning and use were confined merely to cash audit, and the auditor has to ascertain whether the persons are responsible for the maintenance of accounts had adequately accounted for all the cash receipts and the payment on behalf of this principle.
But the word audit has an extensive usage, and it now means a thorough scrutiny of the books of accounts and its ultimate aim is to verify the financial position disclosed by the balance sheet and profit and loss accounts of a company. In short, an audit implies an investigation and a report. The process of checking and vouching continues until the study is completed and the auditor enables himself to report under the terms of his appointment
Definition of Auditing
“An audit is an examination of accounting records undertaken with a view of establishing whether they correctly and completely reflect the transactions to which the purport to relate.” –Lawrence R. Dickey
“Audit is defined as an investigation of some statements of figures involving examination of certain evidence, so as to enable an auditor to make a report on the statement.” –Taylor and Perry
Classification of Auditors
Auditors of financial statements & non-financial information (including compliance audit) can be classified into three categories:
1) External auditor/Statutory auditor is an independent firm engaged by the client subject to the audit to express an opinion on whether the company's financial statements are free of material misstatements, whether due to fraud or error. For publicly traded companies, external auditors may also be required to express an opinion on the effectiveness of internal controls over financial reporting. External auditors may also be engaged to perform other agreed-upon procedures, related or unrelated to financial statements. Most importantly, external auditors, though engaged and paid by the company being audited, should be regarded as independent and remain third party.
2) Cost auditor/Statutory cost auditor is an independent firm engaged by the client subject to the cost audit to express an opinion on whether the company's cost statements and cost sheet are free of material misstatements, whether due to fraud or error. For publicly traded companies, external auditors may also be required to express an opinion on the effectiveness of internal controls over cost reporting.
The document discusses COSO 2013 and what auditors need to know about COSO 2013 implementations. It provides background on COSO and why the framework was updated in 2013. It also discusses problems in the marketplace related to internal controls and financial reporting, such as deficiencies found in many audits. The implications are that auditors need to properly evaluate client's risk assessments, internal controls, financial reporting practices, and monitoring activities to issue an unqualified opinion.
Unlocking Productivity: Leveraging the Potential of Copilot in Microsoft 365, a presentation by Christoforos Vlachos, Senior Solutions Manager – Modern Workplace, Uni Systems
“An Outlook of the Ongoing and Future Relationship between Blockchain Technologies and Process-aware Information Systems.” Invited talk at the joint workshop on Blockchain for Information Systems (BC4IS) and Blockchain for Trusted Data Sharing (B4TDS), co-located with with the 36th International Conference on Advanced Information Systems Engineering (CAiSE), 3 June 2024, Limassol, Cyprus.
Infrastructure Challenges in Scaling RAG with Custom AI modelsZilliz
Building Retrieval-Augmented Generation (RAG) systems with open-source and custom AI models is a complex task. This talk explores the challenges in productionizing RAG systems, including retrieval performance, response synthesis, and evaluation. We’ll discuss how to leverage open-source models like text embeddings, language models, and custom fine-tuned models to enhance RAG performance. Additionally, we’ll cover how BentoML can help orchestrate and scale these AI components efficiently, ensuring seamless deployment and management of RAG systems in the cloud.
Observability Concepts EVERY Developer Should Know -- DeveloperWeek Europe.pdfPaige Cruz
Monitoring and observability aren’t traditionally found in software curriculums and many of us cobble this knowledge together from whatever vendor or ecosystem we were first introduced to and whatever is a part of your current company’s observability stack.
While the dev and ops silo continues to crumble….many organizations still relegate monitoring & observability as the purview of ops, infra and SRE teams. This is a mistake - achieving a highly observable system requires collaboration up and down the stack.
I, a former op, would like to extend an invitation to all application developers to join the observability party will share these foundational concepts to build on:
Programming Foundation Models with DSPy - Meetup SlidesZilliz
Prompting language models is hard, while programming language models is easy. In this talk, I will discuss the state-of-the-art framework DSPy for programming foundation models with its powerful optimizers and runtime constraint system.
In his public lecture, Christian Timmerer provides insights into the fascinating history of video streaming, starting from its humble beginnings before YouTube to the groundbreaking technologies that now dominate platforms like Netflix and ORF ON. Timmerer also presents provocative contributions of his own that have significantly influenced the industry. He concludes by looking at future challenges and invites the audience to join in a discussion.
Removing Uninteresting Bytes in Software FuzzingAftab Hussain
Imagine a world where software fuzzing, the process of mutating bytes in test seeds to uncover hidden and erroneous program behaviors, becomes faster and more effective. A lot depends on the initial seeds, which can significantly dictate the trajectory of a fuzzing campaign, particularly in terms of how long it takes to uncover interesting behaviour in your code. We introduce DIAR, a technique designed to speedup fuzzing campaigns by pinpointing and eliminating those uninteresting bytes in the seeds. Picture this: instead of wasting valuable resources on meaningless mutations in large, bloated seeds, DIAR removes the unnecessary bytes, streamlining the entire process.
In this work, we equipped AFL, a popular fuzzer, with DIAR and examined two critical Linux libraries -- Libxml's xmllint, a tool for parsing xml documents, and Binutil's readelf, an essential debugging and security analysis command-line tool used to display detailed information about ELF (Executable and Linkable Format). Our preliminary results show that AFL+DIAR does not only discover new paths more quickly but also achieves higher coverage overall. This work thus showcases how starting with lean and optimized seeds can lead to faster, more comprehensive fuzzing campaigns -- and DIAR helps you find such seeds.
- These are slides of the talk given at IEEE International Conference on Software Testing Verification and Validation Workshop, ICSTW 2022.
Goodbye Windows 11: Make Way for Nitrux Linux 3.5.0!SOFTTECHHUB
As the digital landscape continually evolves, operating systems play a critical role in shaping user experiences and productivity. The launch of Nitrux Linux 3.5.0 marks a significant milestone, offering a robust alternative to traditional systems such as Windows 11. This article delves into the essence of Nitrux Linux 3.5.0, exploring its unique features, advantages, and how it stands as a compelling choice for both casual users and tech enthusiasts.
Building Production Ready Search Pipelines with Spark and MilvusZilliz
Spark is the widely used ETL tool for processing, indexing and ingesting data to serving stack for search. Milvus is the production-ready open-source vector database. In this talk we will show how to use Spark to process unstructured data to extract vector representations, and push the vectors to Milvus vector database for search serving.
Maruthi Prithivirajan, Head of ASEAN & IN Solution Architecture, Neo4j
Get an inside look at the latest Neo4j innovations that enable relationship-driven intelligence at scale. Learn more about the newest cloud integrations and product enhancements that make Neo4j an essential choice for developers building apps with interconnected data and generative AI.
Unlock the Future of Search with MongoDB Atlas_ Vector Search Unleashed.pdfMalak Abu Hammad
Discover how MongoDB Atlas and vector search technology can revolutionize your application's search capabilities. This comprehensive presentation covers:
* What is Vector Search?
* Importance and benefits of vector search
* Practical use cases across various industries
* Step-by-step implementation guide
* Live demos with code snippets
* Enhancing LLM capabilities with vector search
* Best practices and optimization strategies
Perfect for developers, AI enthusiasts, and tech leaders. Learn how to leverage MongoDB Atlas to deliver highly relevant, context-aware search results, transforming your data retrieval process. Stay ahead in tech innovation and maximize the potential of your applications.
#MongoDB #VectorSearch #AI #SemanticSearch #TechInnovation #DataScience #LLM #MachineLearning #SearchTechnology
HCL Notes und Domino Lizenzkostenreduzierung in der Welt von DLAUpanagenda
Webinar Recording: https://www.panagenda.com/webinars/hcl-notes-und-domino-lizenzkostenreduzierung-in-der-welt-von-dlau/
DLAU und die Lizenzen nach dem CCB- und CCX-Modell sind für viele in der HCL-Community seit letztem Jahr ein heißes Thema. Als Notes- oder Domino-Kunde haben Sie vielleicht mit unerwartet hohen Benutzerzahlen und Lizenzgebühren zu kämpfen. Sie fragen sich vielleicht, wie diese neue Art der Lizenzierung funktioniert und welchen Nutzen sie Ihnen bringt. Vor allem wollen Sie sicherlich Ihr Budget einhalten und Kosten sparen, wo immer möglich. Das verstehen wir und wir möchten Ihnen dabei helfen!
Wir erklären Ihnen, wie Sie häufige Konfigurationsprobleme lösen können, die dazu führen können, dass mehr Benutzer gezählt werden als nötig, und wie Sie überflüssige oder ungenutzte Konten identifizieren und entfernen können, um Geld zu sparen. Es gibt auch einige Ansätze, die zu unnötigen Ausgaben führen können, z. B. wenn ein Personendokument anstelle eines Mail-Ins für geteilte Mailboxen verwendet wird. Wir zeigen Ihnen solche Fälle und deren Lösungen. Und natürlich erklären wir Ihnen das neue Lizenzmodell.
Nehmen Sie an diesem Webinar teil, bei dem HCL-Ambassador Marc Thomas und Gastredner Franz Walder Ihnen diese neue Welt näherbringen. Es vermittelt Ihnen die Tools und das Know-how, um den Überblick zu bewahren. Sie werden in der Lage sein, Ihre Kosten durch eine optimierte Domino-Konfiguration zu reduzieren und auch in Zukunft gering zu halten.
Diese Themen werden behandelt
- Reduzierung der Lizenzkosten durch Auffinden und Beheben von Fehlkonfigurationen und überflüssigen Konten
- Wie funktionieren CCB- und CCX-Lizenzen wirklich?
- Verstehen des DLAU-Tools und wie man es am besten nutzt
- Tipps für häufige Problembereiche, wie z. B. Team-Postfächer, Funktions-/Testbenutzer usw.
- Praxisbeispiele und Best Practices zum sofortigen Umsetzen
Climate Impact of Software Testing at Nordic Testing DaysKari Kakkonen
My slides at Nordic Testing Days 6.6.2024
Climate impact / sustainability of software testing discussed on the talk. ICT and testing must carry their part of global responsibility to help with the climat warming. We can minimize the carbon footprint but we can also have a carbon handprint, a positive impact on the climate. Quality characteristics can be added with sustainability, and then measured continuously. Test environments can be used less, and in smaller scale and on demand. Test techniques can be used in optimizing or minimizing number of tests. Test automation can be used to speed up testing.
GraphRAG for Life Science to increase LLM accuracyTomaz Bratanic
GraphRAG for life science domain, where you retriever information from biomedical knowledge graphs using LLMs to increase the accuracy and performance of generated answers
AI 101: An Introduction to the Basics and Impact of Artificial IntelligenceIndexBug
Imagine a world where machines not only perform tasks but also learn, adapt, and make decisions. This is the promise of Artificial Intelligence (AI), a technology that's not just enhancing our lives but revolutionizing entire industries.
5. Objectives
Define SAS 112 (Boring)
Explain SAS 112, the nuts and bolts
–
Lots of examples
Raise awareness within your organization
What will the auditors’ areas of concern be?
–
Get the answers to the test before the test
–
All of these points are available on the internet, through
–
books, consultants, etc. Don’t reinvent the wheel when
presenting to your organization. Google “SAS 112
summary”
Reduce your audit fees
5 www.metrometro.com
6. Sas 112 - What does it do?
SAS 112 provides guidance to enhance
your ability to identify and evaluate
control deficiencies during an audit and
then communicate to management and
those charged with governance those
deficiencies that you believe are
significant deficiencies or material
weaknesses.
6 www.metrometro.com
7. What does it really do?
defines the terms quot;significant deficiencyquot; and
quot;material weaknessquot;
provides guidance on evaluating the severity of
control deficiencies identified in an audit of financial
statements; and
requires the auditor to communicate, in writing, to
management and those charged with governance
(e.g., Board of Directors), significant deficiencies and
material weaknesses identified in an audit
7 www.metrometro.com
8. Two Unconditional Requirements
The auditor must evaluate identified
1.
control deficiencies and determine
whether those deficiencies,
individually or in combination, are
significant deficiencies or material
weaknesses.
and…
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9. Two Unconditional Requirements
2. The auditor must communicate, in
writing, significant deficiencies and
material weaknesses to management
and those charged with governance.
Including those found in prior audits but
not yet fixed.
9 www.metrometro.com
10. What is an Internal Control
The accounting profession, collaborating in a body known as
COSO (Committee on Sponsoring Organizations) has adopted
a definition of internal controls:
A process, effected by the entity’s board of directors,
management and other personnel, designed to provide
reasonable assurance regarding the achievement of objectives
in the following categories:
Reliability of financial reporting
–
Effectiveness and efficiency of operations
–
Compliance with applicable laws and regulations
–
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11. Reliability of financial reporting
… refers to the published financial
statements. While this is primarily the
responsibility of an organization’s accounting
group, all transactions within the organization
are affected since transactions and financial
results emanate from all activities of an
organization.
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12. Operations and Compliance
The other two bullets (Operations and Compliance) also have
significance for all organization activities.
Within any department or organization, the goals of internal
controls are:
To control the financial, operational and managerial activities of a
–
department
To comply with federal, state and local laws, rules and regulations
–
and organization policies
To prevent fraud
–
To highlight positive and negative aspects of an operation or
–
function
To alert management and other concerned parties of relevant
–
required courses of action
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13. The Meat of SAS 112
Definition 1 – Control Deficiency
When the design or implementation of a
control does not allow management or
employees, in the normal course of
performing their assigned functions, to
prevent or detect misstatements on a timely
basis. Two categories:
Design Deficiency
–
Operation Deficiency
–
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14. Definition 2 – Significant Deficiency
A significant deficiency is a control deficiency, or
combination of control deficiencies, that
adversely affects the entity’s ability to initiate,
authorize, record, process, or report financial
data reliably in accordance with GAAP such that
there is more than a remote likelihood that a
misstatement of the entity’s financial statements
that is more than inconsequential will not be
prevented or detected.
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15. Definition 3 – Material Weakness
A material weakness is a
significant deficiency, or
combination of significant
deficiencies, that results in
more than a remote likelihood
that a material misstatement
of the financial statements will
not be prevented or detected.
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16. HOW DO WE DETERMINE SEVERITY?
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17. Evaluation of a Control Deficiency
(3 considerations)
Potential for misstatement - Not just “did” it
occur, but “will” it occur.
Likelihood – probability that a misstatement
will occur. “reasonably possible”
Magnitude – extent of the misstatement that
could occur.
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18. Magnitude
Inconsequential
More than inconsequential
Material
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19. “Prudent Official” Test
When evaluating the significance of a
deficiency, auditors are to step back and
consider whether a prudent official with the
same knowledge of the situation would agree
with our classification of the deficiency.
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20. Form and Timing of Communication
Significant deficiencies and material
weaknesses must be communicated in
writing within 60 days from the issuance of
the report
to management AND those charged with
–
governance.
If communicated last year but not fixed,
–
communicate again.
20 www.metrometro.com
21. EXAMPLES
We’ll tackle some general and specific
examples of control deficiencies, significant
deficiencies and material weaknesses.
21 www.metrometro.com
22. Examples of Control Deficiencies
lack of review and reconciliation of
departmental expenditures
no supervisor signature required on travel
expenditure
same person able to request and approve an
expenditure
same person does billing, opens mail,
receives and deposits checks
same person initiates and approves payroll
22 www.metrometro.com
23. Case Study
One of the most discussed deficiencies is the
Auditor preparing the client’s financial
statements. Must this be reported as a
material weakness in internal control?
Under what circumstances can an auditor
prepare statements and not have to report a
material weakness? Let’s see….
23 www.metrometro.com
24. Clients Accountant Is Capable
The client’s accountant is capable of preparing
the financial statements but is too busy. The
auditor knows the accountant is capable
because he/she prepared last year and did a
good job. Accountant provides adjusted trial
balance =
Not a control deficiency
24 www.metrometro.com
25. Clients Accountant is Capable but
does less work
Similar situation as last slide. This time, accountant
does not have enough time to prepare year end
closing entries, accruals and adjusted trial balance.
Instead, auditor is given the task of preparing
accruals, closing entries, draft statements and notes.
Accountant will review all entries and auditor
prepared documents and trace entries back to
source documents… What do you think? Control
Deficiency or no?
25 www.metrometro.com
26. The Old “Professional Judgment”
Excuse
Although the accountant is capable of doing the
work and seems to have controls in place to
prevent and detect misstatements it could be
argued that the client does not take the
closing process seriously. If the preparation
of the financial statements is a low priority
and this is an annual event, could be a
strong indicator of a material weakness.
26 www.metrometro.com
27. Clients Accountant is Not Capable
The staff accountant/bookkeeper is unable to
either adjust the trial balance or evaluate the
auditors adjustments. Neither the
accountant nor anyone else in the
organization is capable of evaluating whether
the financial statements are fairly presented
in accordance with GAAP….
Control Deficiency and Material Weakness
27 www.metrometro.com
28. Some Slam Dunks (Strong indicator of
material weakness)
Ineffective oversight by those charged with
governance of the entity’s financial reporting and
internal control, or an ineffective overall governance
structure.
Restatement of previously issued financial
statements to reflect the correction of a material
misstatement.
Auditor finds a material misstatement that was not
picked up by the internal control system.
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29. Slam Dunks
An ineffective internal audit function or risk
assessment function when such functions
are important to the monitoring of internal
controls such as for large or complex entities.
Identification of fraud of any magnitude on
the part of senior management.
Failure to assess the effect of a significant
deficiency previously communicated.
29 www.metrometro.com
30. Case Study – Lack of segregation of
duties
Small Nonprofit
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31. Audit Adjustments
Q- In reading the definition of significant
deficiency and material weakness, it seems
that if the auditor discovers material audit
adjustments during the audit, there is one or
more material weaknesses?
True or False
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32. Audit Adjustments
A - If the auditor discovers a material misstatement and
proposes an audit adjustment, then obviously, the
client’s system of internal control did not prevent or
detect the misstatement. Accordingly, the auditor
would have identified a control deficiency that must
be evaluated. Since the amount is material, the only
remaining question is whether the likelihood is more
than remote. If yes, then by definition, there is a
material weakness.
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33. Audit Adjustment Consideration
Q - A client knows there are significant audit issues that
need to be addressed in the financial records but
does not make adjustments for those issues until he
can discuss them with the auditor as to an
appropriate resolution during the audit. Once
discussed, a significant audit adjustment is then
proposed by the auditor and accepted by the
company. Would this result in the reporting of a
material weakness?
33 www.metrometro.com
34. Audit Adjustment Consideration
A - The fact that a client is aware that there is a
financial statement matter that needs
attention or clarification indicates that the
preparer could be sufficiently knowledgeable
about accounting standards. That awareness
and follow up is one element of effective
internal controls over financial reporting.
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35. Clean Opinion?
Q - Can the auditor still justify issuing a clean
opinion on the financial statements if the
client has significant deficiencies or material
weaknesses?
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36. Clean Opinion?
A - Yes, the role of the auditor is to obtain a
sufficient understanding of the entity’s
internal control sufficient to plan and conduct
his or her audit. When there are material
weaknesses, the auditor responds to those
control risks by adjusting the nature, timing
and extent of the audit procedures.
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38. Control Environment
The control environment sets the tone of an
organization, influencing the control consciousness
of its people. It is the foundation for all other
components of internal control, providing discipline
and structure. Control environment factors include
the integrity, ethical values and competence of the
entity's people; management's philosophy and
operating style; the way management assigns
authority and responsibility, and organizes and
develops its people; and the attention and direction
provided by the board of directors.
38 www.metrometro.com
39. Control Environment Examples
Does management communicate
to employees its views on business
practices and ethical behavior
either orally or by example?
39 www.metrometro.com
40. Control Environment Examples
Has the nonprofit organization adopted and
communicated to employees and board members a
specific policy on conflict of interest that specifies
that personnel in a position of trust are not related to
each other; employees are prohibited from having
business dealings with companies affiliated with, or
who act as major customers or suppliers of, the
nonprofit organization; transactions with officials of
the nonprofit organization are adequately controlled
and disclosed in the records; and such transactions
occur only in the normal course of business and are
approved by the governing board?
40 www.metrometro.com
41. Control Environment Example
Is management satisfied that all employees
are honest?
Does management consider the competence
levels that are necessary for various jobs and
the skills and knowledge that are required for
reliable accounting and financial reporting.
Do human resource policies and practices include
background and reference checks for new employees,
adequate training, and regular performance evaluations,
especially for accounting and IT personnel?
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42. Cash Controls
Mail is opened and a list of daily receipts is
prepared by two or more people independent
of the cashier and accounts receivable
bookkeeping.
Cash receipts from special events are
counted by at least two people and no more
than one volunteer.
A separate imprest payroll bank account is
used.
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43. Cash Controls
Checks are not to be returned to the preparer after
signing.
Stale checks are followed up on periodically by
individuals independent of accounts payable and
cash disbursement functions.
Collectors issue prenumbered receipts for canister
collections and the contents are counted in the
presence of two persons.
Prenumbered bid sheets from silent auctions are
reconciled to cash receipts.
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44. Cash Controls
Bank accounts are reconciled by individuals
independent of cash receipts and disbursements
functions.
Checks are prepared only after proper matching of
supporting documentation (vendor’s invoice,
receiving report, purchase order, etc.).
How does all of this relate to online bill pay? We
hardly write any checks in our office. Soon we won’t
write checks or receive checks.
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45. Payroll Controls
There is restricted access to:
Blank payroll checks
–
Mechanical check signers or signature plates (if
–
used)
Personnel records
–
Payroll computer files used to calculate payroll
–
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46. Payroll controls when using outside
service
If payroll is processed by an outside service
organization, procedures are in place to ensure that:
Time records submitted for processing are complete and
–
accurate and appropriate control totals are maintained for
subsequent reconciliation to payroll registers.
All other payroll information provided to the service
–
organization (pay rates, withholdings, etc.) is authorized,
and all authorized information is communicated.
Payroll registers produced by the service organization are
–
reviewed after processing, reconciled to control totals, and
approved prior to distribution of paychecks.
Total of paychecks and/or direct deposits agrees with
–
payroll registers.
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47. Controls over purchases and payables
A current purchasing manual defines
restrictions on purchases of goods or
services from governing board members,
employees, or other suppliers that would
create a conflict of interest. (Related party)
Program managers periodically compare
actual expenses to budgeted expenses and
investigate unanticipated variances.
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48. Controls over purchases and payables
There is an approved vendors list.
The appropriate level of management or
another appropriate person periodically
compares actual expenditures to budgeted
expenditures and follows up on significant
variances.
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49. Controls over donated materials,
facilities and services
The organization has established procedures
for the supervision of volunteers.
The organization maintains time sheets or
other records to substantiate the date of
donated services, nature of the services, and
time; and those records are reviewed and
approved by responsible personnel.
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50. Controls over revenue and receivables
The organization publishes the names of
donors in its journals, newsletters, programs,
etc., and someone independent of
accounting investigates complaints of errors
or omissions.
The organization periodically sends
statements to service recipients, members,
etc.
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51. Controls over revenue and receivables
Customer/member/donor complaint follow-up
is independent of accounts receivable,
bookkeeping, and cash handling.
Monthly statements of customer/member
accounts are mailed by someone other than
the person responsible for accounts
receivable bookkeeping.
The organization prohibits loans to
employees and governing board members.
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52. Controls over revenue and receivables
Employees with receivable responsibilities
are required to take vacations and other
employees are required to perform those
functions when an employee is absent.
The organization uses prenumbered
contribution acknowledgement forms.
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53. Fraud Assesment
Incentives or pressures for management to
intentionally misstate the financial statements.
The organization is experiencing a shortfall in
unrestricted contributions that may create an
incentive to use restricted net assets to cover the
shortfall.
The organization has donors, grantors, or other
providers who set up restrictions or conditions
based on reported financial statement amounts.
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54. Fraud Assessment
Conditions that indicate management’s personal
net worth may be threatened by the organization’s
financial performance, such as:
A significant portion of management’s compensation
–
depends on bonuses, or other incentives, the value of
which is dependent on the organization meeting
aggressive performance targets (for example, program
accomplishments, budget, fund-raising targets, financial
position, cash flow, or other financial or operating goals).
The organization is experiencing a poor or deteriorating
–
financial condition and board members or management
have personally guaranteed significant debts of the
organization.
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55. Fraud Assessment
The organization engages in significant
related-party transactions not in the ordinary
course of business.
Management fails to effectively define,
communicate, implement, support, or
enforce the organization’s values or ethics.
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56. Communication and enforcement of
ethical values
Are members of the organization’s governing body (board of directors, board of trustees,
committees of the board, etc.) elected to their positions?
Is the governing board sufficiently independent from management so that necessary questions
are raised?
Does the governing board meet in regularly scheduled meetings, and are clear, written minutes
kept of all meetings?
Does the governing board (or audit committee) hold frequent and timely meetings with the chief
financial and/or accounting personnel and external auditors?
Does the governing board (or audit committee) approve the appointment of auditors?
Does the governing board take an active interest in the financial affairs of the organization and
in the reports available to them?
Does the governing board include outside members with business experience?
Is sufficient information provided to the governing board (or audit committee) in a manner that
allows adequate and timely monitoring?
Does the governing board (or audit committee) meet with the auditors to discuss the auditor’s
report, the communication of internal control related matters, the Single Audit reports (if the
organization receives federal awards and is required to have a Single Audit), and other matters
related to the audit?
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58. Take Control - Make Your Audit Easier
Make less journal entries - Audit standards
require that we review journal entries for
unusual activities. The more entries, the
longer the audit takes. You can cut down on
journal entries by recording bank charges,
debits and manual checks as you would any
other cash disbursement. Record bank
account interest earned like you would a
deposit.
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59. Take Control - Make Your Audit Easier
Be ready for us - Make sure your auditor
has provided you with a long Client
Assistance List (CAL) or PBC (Provided by
Client) list. The longer the better so that you
can do the work at your schedule instead of
scurrying during the audit fieldwork. Number
the list and have a folder, notebook tab, or
pile for each number. Impress the auditor,
be organized, that's what we're looking for.
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60. Take Control - Make Your Audit Easier
Be consistent and predictable - We like ordinary
and boring. If you have a group of month end
journal entries for depreciation, accrued payroll, etc.,
make them all on one entry that looks the same each
month. Keep entries as ordinary and routine as
possible. Record deposits the same. Record
invoices the same. Make the transactions as easily
identifiable as possible.
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61. Take Control - Make Your Audit Easier
Support, Support, Support - Every
transaction requires support. Checks,
deposits, journal entries. Be consistent by
including the same support on each type of
transaction. Make sure every transaction
has the required approvals.
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62. Take Control - Make Your Audit Easier
Document your approval processes and
follow them - If a disbursement requires a
board signature, make sure it has a board
signature. Make sure your approval
processes will pass the auditor's tests.
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63. Take Control - Make Your Audit Easier
Don't turn the audit engagement into an
accounting engagement. Get the accounting work
done first. Post accruals, depreciation, make sure
everything ties in, etc. We don't want to do
accounting work at the audit. Auditors like to tick
and tie to get comfort that the numbers are
right. Every time we have to make an entry, you lose
credibility and it takes longer for us to get
comfortable. Your auditors don't have to be your
accountants, you can hire an accountant to do a
monthly or quarterly review so that you'll be more
prepared for your audit.
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64. Take Control - Make Your Audit Easier
Insist on consistency from your audit
team. Ask ahead of time, who will be
coming. Are they the same auditors as last
year? If not, push back a little bit. The more
consistency, the less learning curve and the
less interruptions.
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65. From RSM McGladry
Educate your board on the new requirements of SAS No. 112 and the
possible findings.
Ensure internal controls over financial reporting are formally
documented. Monitor and test these internal controls for accuracy on a
semi-annual or annual basis.
Reconcile the general ledger to the amounts reported in the financial
statements (including disclosures) and apply analytical review
procedures to the financial statements.
Begin taking inventory of your significant controls over your most
guarded assets (or financial reporting process) and start documenting
those critical aspects of internal controls.
Assess your reliance on external auditors to draft your financials. At
least for this year, formally designate a person responsible for
reviewing and approving the financial statements and design
checklists to document this review.
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66. Don’t reinvent the wheel – web
resources
If you want to make a powerpoint
presentation on SAS 112 to your
organization and/or its board, then google
“SAS 112 powerpoint” and several
presentations will come up.
Communicate, communicate, communicate
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