INTERNAL CONTROLS AND THE ASSESSMENT OF CONTROL RISK

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Presentation transcript:

INTERNAL CONTROLS AND THE ASSESSMENT OF CONTROL RISK CHAPTER 9 INTERNAL CONTROLS AND THE ASSESSMENT OF CONTROL RISK

CLIENT RESPONSIBILITIES DESIGN OF SYSTEM REASONABLE ASSURANCE INHERENT LIMITATIONS MANAGEMENT OVERRIDE HUMAN ERROR COLLUSION OBJECTIVES RELIABILITY OF FINANCIAL REPORTS EFFECTIVENESS AND EFFICIENCY OF OPERATIONS COMPLIANCE WITH LAWS

AUDITOR RESPONSIBILITIES UNDERSTAND INTERNAL CONTROLS ASSESS CONTROL RISK AUDITOR CONCERNS RELIABILITY OF FINANCIAL REPORTS CONTROLS OVER CLASSES OF TRANSACTIONS

COMPONENTS OF INTERNAL CONTROL CONTROL ENVIRONMENT INTEGRITY AND ETHICAL VALUES AUDIT COMMITTEE MANAGEMENT PHILOSOPHY ORGANIZATIONAL STRUCTURE ASSIGNMENT OF AUTHORITY HUMAN RESOURCES POLICIES

RISK ASSESSMENT CONTROL ACTIVITIES MANAGEMENT METHODS FOR IDENTIFICATION AND ANALYSIS OF BUSINESS RISKS CONTROL ACTIVITIES SEGREGATION OF DUTIES SEPARATION OF CUSTODY FROM RECORDING SEPARATION OF AUTHORIZATION FROM EXECUTION PROPER AUTHORIZATIONS ADEQUATE DOCUMENTS PHYSICAL CONTROLS INDEPENDENT CHECKS

INFORMATION AND COMMUNICATION INFORMATION SYSTEMS CHANNELS OF COMMUNICATION MONITORING PERIODIC ASSESSMENT AND FEEDBACK INTERNAL AUDIT AUDIT COMMITTEE

OBTAIN UNDERSTANDING AND ASSESS CONTROL RISK REASONS FOR OBTAINING UNDERSTANDING AUDITABILITY OF ENTITY POTENTIAL MISSTATEMENTS ACCEPTABLE DETECTION RISK DESIGN TESTS

DOCUMENT UNDERSTANDING OBTAIN UNDERSTANDING INQUIRY OF CLIENT REVIEW DOCUMENTATION WALK THRU DOCUMENT UNDERSTANDING QUESTIONNAIRES FLOW CHARTS NARRATIVES ASSESSMENT OF CONTROL RISK IDENTIFY TRANSACTION OBJECTIVES IDENTIFY SPECIFIC CONTROLS IDENTIFY WEAKNESSES

CONSIDER IF LOWER CONTROL RISK COULD BE SUPPORTED TEST OF CONTROLS INQUIRIES OF CLIENT EXAMINE DOCUMENTS AND RECORDS OBSERVE CLIENT PERSONNEL REPERFORM CLIENT PROCEDURES SAMPLE DRAWN FROM ENTIRE PERIOD REASSESS CONTROL RISK BASED ON RESULTS REVISE PLANNED SUBSTANTIVE TESTS