BUS 426 Lecture Notes - Lecture 4: Audit Risk, Financial Statement, Regional Policy Of The European Union
Document Summary
Internal controls, are policies and procedures designed to provide reasonable assurance for management to achieve goals and objectives. Management"s objective to internal controls: maintain reliable control system, safeguard assets, optimize the use of resources, prevent or detect errors/frauds. Auditor"s objective to internal controls: plan the audit process which includes evaluating internal controls and assess control risk, consider only internal controls over financial reporting. Establish + maintain proper system of internal controls. + dependability of individuals that execute the controls: internal controls can be overridden by collusion. Control environment: risk assessment, control activities, information + communications, monitoring. If you have these, then it is a control system. Risk assessment: able to identify risks, evaluate significance of risks, assess likelihood of occurrence, action plan to reduce that risk to an acceptable level. Control activities: policies and procedures to address risks of failing to achieve the objectives, 5 control groups, adequate segregation of duties.