RSM323H1 Lecture Notes - Lecture 13: Audit Evidence, Internal Control, Sample Size Determination
Document Summary
Control risk: risk that client"s internal control system will not prevent/detect material misstatement. Overriding objective of control procedures: to process transactions correctly so that f/s has no material misstatement. Control objectives are established to ensure transactions are properly recorded correct statement. Management responsibility: responsible for control environment, accounting system, establishing and maintaining internal control procedures: cost of controls vs. benefit of risk reduction, internal control: process designed, implemented and maintained by management to provide reasonable assurance over: External auditor"s responsibility: evaluating existing internal control, assess risk of material misstatement related to them, find out what an organization does to avoid potential errors and irregularities in 6 categories of control objectives. Validity, completeness, authorization, accuracy, classification, proper period (cut-off: reasons for control evaluation: Give auditor a basis for determining nature, timing, extent of balance audit program. To obtain info about control weaknesses that should be reported to management and the board of directors. To identify areas at risk of material misstatement.
