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18-Internal Control Standards
Terms in this set (18)
Responsibilities regarding IC?
AU 315: Understand client and environment and assess RMM; IC is a component of RMM
4 focus points of AU 315?
1. Risk Assessment Procedures
2. Understanding the entity and environment + IC
3. Assessing RMM
5 risk assessment procedures
3. Analytical procedures
4. Review information
5. Discussion among audit team members
Elements to understanding the entity
1. Nature of entity
2. Objectives and strategies
3. Performance measurement and review
4. Internal Controls
5. External factors: industry and regulatory
5 components of IC?
Information and Communication Systems
Policies and procedures to establish the overall control consciousness of the organization
7 elements of the control environment
1. Communication/enforcement of ethical values
2. Human resource policies and practices
3. Assignment of authority and responsibility
4. Management philosophy and operating style
5. Participation by those charged with governance
6. Commitment to competence
7. Organizational structure
Policies and procedures to identify relevant risks and prioritize them so that they can be effectively managed
Policies and procedures to provide reasonable assurance that management specific objectives will be achieved.
5 components of control activities
Segregation of duties
3 primary duties that should be segregated?
Information and communication
Policies and procedures to identify, capture and exchange relevant information in a form and time frame that enables personnel to meet their responsibilities
Policies and procedures to assess the effectiveness of IC over time
Risk Assessment: Significant risks
Require special consideration
Risk Assessment: Risks for which substantive procedures alone will not provide sufficient evidence
Must consider design and implementation of controls
What IC matters should be documented?
1. Risk Assessment discussion
2. Major elements of understanding of each of the 5 elements of IC structure, information sources, and RA procedures performed
3. Assessment of risk and basis
4. Risks identified and related controls
Responses to changes in RMM at f/s level?
More or less experienced personnel
More or less supervision
Use of specialists
Change of strategy between "substantive" and "combined"
Responses to changes in RMM at relevant assertion level?
Nature timing and extent of procedures
Use of tests of controls
This set is often in folders with...
16- Internal Control Basics
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