【正文】 g controls and operational controls (that is, those designed to achieve operational objectives). 3. Type of internal controlMost internal controls can be classified as preventive or detective.Preventive controls are designed to discourage errors or irregularities. ? A puter application which checks validity prevents the entry of an invalid account number.? Reading and understanding business Human Resource policies, such as Work Hours [for PA Staff], helps prevent violations of the Federal Fair Labor Standards Act. [Human Resources Professional Staff Policy ]? A manager39。 Risk assessments philosophy and operating stylee. Organizational structuref. Assignment of authority and responsibilityg. Human resource policies and practices The auditor should obtain sufficient knowledge of the control environment to understand management39。s risk assessment for financial reporting purposes is its identification, analysis, and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with generally accepted accounting principles. For example, risk assessment may address how the entity considers the possibility of unrecorded transactions or identifies and analyzes significant estimates recorded in the financial statements. Risks relevant to reliable financial reporting also relate to specific events or transactions. Risks relevant to financial reporting include external and internal events and circumstances that may occur and adversely affect an entity39。s risk assessment is to identify, analyze, and manage risks that affect entity objectives. In a financial statement audit, the auditor assesses inherent and control risks to evaluate the likelihood that material misstatements could occur in the financial statements.C. Control Activities Control activities are the policies and procedures that help ensure that management directives are carried out. They help ensure that necessary actions are taken to address risks to achievement of the entity39。 access security。 it is acplished by ongoing monitoring activities and by separate evaluations of internal control such as selfassessments, peer reviews, and internal audits. Note: Some of the factors in internal controls are those factors to ensuring about atmosphere of strong internal control throughout all agencies. These factors are reasonable assurance, supportive attitude, petent personnel, control objectives, control techniques and continuous monitoring.Reasonable assurance: Internal control systems are to provide reasonable assurance that management objectives are acplished. A sound system recognizes that the cost of SSRN, USA 2020 A Clear Look at Internal Control: Theory and ConceptsTop 10 Paper, First Quarterly 2020 11internal control should not exceed the benefits achieved, and reasonable assurance equates to a satisfactory level of confidence given the considerations of costs, benefits and risks. The required determinations call for judgment to be exercised by agency staff.In exercising that judgment, agencies should:a) Identify:? Risks inherent in agency operations,? Criteria for determining low, medium, and high risks,? An acceptable level of risk under varying circumstances.b) Assess the quantity and quality of risks. Costs refer to the financial measure of resources consumed in acplishing a specified purpose。s operations. We can demonstrate all of any agency operations as agency cycle that can be grouped into one or more groups. Cycles make up all specific activities (such as identifying, classifying, recording, and reporting information) required to process a transaction or event. Cycles should be patible with an agency39。 mitment to achieving strong control. This mitment is met through good organizational structure, personnel practices, munication, protection and use of resources. Systematic accountability, monitoring and systems of reporting and general leadership are required. One important way to prove management39。 information about an organization39。s understanding of control activities enpasses a SSRN, USA 2020 A Clear Look at Internal Control: Theory and ConceptsTop 10 Paper, First Quarterly 2020 10broader range of accounts and disclosures than what is normally obtained in a financial statement audit. The auditor should obtain an understanding of how IT affects control activities that are relevant to planning the audit. Some entities and auditors may view the IT control activities in terms of application controls and general controls. Application controls apply to the processing of individual applications. Accordingly, application controls relate to the use of IT to initiate, record, process, and report transactions or other financial data. These controls help ensure that transactions occurred, are authorized, and are pletely and accurately recorded and processed. Examples include edit checks of input data, numerical sequence checks, and manual followup of exception reports. General controls are policies and procedures that relate to many applications and support the effective functioning of application controls by helping to ensure the continued proper operation of information systems. General controls monly include controls over data center and work operations。s risk assessment differs from the auditor39。 attitude, awareness, and actions concerning the control environment, SSRN, USA 2020 A Clear Look at Internal Control: Theory and ConceptsTop 10 Paper, First Quarterly 2020 8considering both the substance of controls and their collective effect.