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

2. 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

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

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

5. 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

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

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

8. 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

9. 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