【正文】 authority and responsibilityg. Human resource policies and practices The auditor should obtain sufficient knowledge of the control environment to understand management39。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。 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。 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。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。 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.The auditor should concentrate on the substance of controls rather than their form, because controls may be established but not acted upon. For example, management may establish a formal code of conduct but act in a manner that condones violations of that code. When obtaining an understanding of the control environment, the auditor considers the collective effect on the control environment of strengths and weaknesses in various control environment factors. Management39。s review of long distance telephone charges will detect improper or personal calls that should not have been charged to the account.SSRN, USA 2020 A Clear Look at Internal Control: Theory and ConceptsTop 10 Paper, First Quarterly 2020 7Through careful design, the system of internal controls can help our unit operate more efficiently and effectively and provide a reasonable level of assurance that the processes and products for which you are responsible are adequately protected.? Maintaining written procedures for manual processing will ensure that operations can continue in the event of puter failure.4. The factors of internal controls Internal control consists of five interrelated ponents as follows: b) Reliability of financial reporting。s payments to third parties are for valid services rendered.) Internal control procedures reduce process variation, leading to more predictable outes. Internal controls within business entities are called also business controls. They are tools used by manager39。 last revised: April, 2020This paper can be downloaded from theSocial Science Research Network Electronic Paper Collection:Abstract: internal control is an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard