internalcontrolandcontrolrisk(英文版)(ppt58頁)-在線瀏覽
2025-04-29 23:13本頁面
【正文】 are discovered with the client. ? No munication should be written saying that there are no reportable conditions. 10 35 Material Weakness ? A reportable condition that is so bad as to allow material misstatements into the F/S is called a material weakness. ? Both are municated to the client. 10 36 Primary Reason for Understanding Internal Control ? To plan our audit. ? The purpose of control activities is to process transactions correctly. ? To process a transaction correctly these transaction realted objectives should be met: ? Accuracy ? Completeness ? Classification ? Existence ? Posting and Summarization ? Timing 10 37 Definition of Internal Control ? Policies and procedures to detect, prevent and correct errors and fraud in the normal course of employee’s duties. 10 38 Good Internal Controls The client should have ? Capable personnel qualified, trained, low turnover ? Segregation of duties authorization, recording, custody and reconciliation ? Controlled access of plant, records and blank forms ? Periodic parisons of assets to books count inventory 10 39 Audit Flow Chart Obtaining understanding of control structure environment, management’s risk assessment, control activities, flow of transactions through accounting system ? Previous experience ? Inquiry of client ? Inspection of documents ? Observation or walkthrough of one or few transactions ? Review of policy manuals. 10 40 Document understanding by: ? Flow charts easy to use, hard to maintain and develop ? Narratives lengthy , good for small items, could fet issues ? Questionnaires good to ensure all things covered, bad yes no answers 10 41 Relying on Controls ? If the control objectives are met, they help insure that the F/S assertions have been met. ? The Auditor may decide to rely on the controls to ensure that transactions are processed correctly. ? If relied on, the controls must be tested to ensure that they do work at least as well as the amount of reliance the auditor is placing on them. ? If the control testing meets or exceeds the auditors expectations then less substantive testing is required to support the balance. 10 42 Controls not relied on: If the control is not to be relied upon to lessen substantive work: ? No control testing ? Control risk is set at maximum 100% or 1 ? Document in working papers that control risk is set to the maximum for this account ? Plan substantive testing only to gather evidence on this account ? Adjust nature, timing and extent of substantive tests 10 43 Assess Control Risk Preliminary ? Evaluate the understanding of the control environment and determine preliminary control risk ? Evaluate the strengths and weaknesses of the control structure. ? Analysis and conclusions are written up and bee part of the working papers. ? This evaluation is often ca
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