ACCT10003 Lecture 9: Internal Assurance - Lecture 9
Internal Assurance
Internal Assurance
•Assurance: the auditor’s ability to provide a degree of satisfaction regarding the reliability of
the information provided.
•The degree of satisfaction achieved is determined by the nature and extent of procedures
performance by the auditor, the results of the procedures and the objectivity of the evidence
obtained.
-degree of satisfaction
-reliability of information
-nature and extent of procedures
-results of the procedure
-objectivity of evidence
•Auditing adds confidence
Accounting Process and Financial Reports
•Assertions:
-Existence or Occurence
-Completeness
-Cut-off
-Rights and obligations
-Accuracy, classification, valuation and allocation
•How do we have trust in the financial statements?
•Can we trust the assertions?
Corporate Governance and Internal Controls
•Corporate Governance: A set of processes and policies in managing an organisation with
sound ethics to safeguard the interests of its stakeholders
-Promotes accountability, fairness and transparency in the organisation’s relationship with its
stakeholders
•Internal control: the bundle of policies, systems and procedures put in place to aid an
organisation in managing its risk exposure and achieving its objectives
-Part of a firm’s corporate governance structure
•COSO definition of internal control: !
A process, effected by an entity's board of
directors, management and other personnel
designed to provide reasonable assurance
regarding the achievement of objectives in the
following categories:
1. Effectiveness and efficiency of operations
2. Reliability of financial reporting
3. Compliance with applicable laws and
regulations
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