ADMS 4552 Study Guide - Internal Audit, Risk Assessment, Data General

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limealligator270

7 Oct 2012

School

York University

Department

Administrative Studies

Course

ADMS 4552

Professor

N A

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Document Summary

Committee of sponsoring organizations of the treadway commission. 5 components of internal control that management designs and implements to provide reasonable assurance that its control objectives will be met: control environment, risk assessment, control activities, monitoring. Actions, policies, and procedures that reflect the overall attitudes of top management, the directors, and the owners of an entity about control and its importance to the entity. Most important subcomponents: active integrity and promotion of ethical values, commitment to competence, board of directors or audit committee participation. Management"s identification and analysis of risks relevant to the preparation of financial statements in conformity with gaap. Determine how management identifies risk relevant to financial reporting, evaluates its significance and likelihood of occurrence and decides the actions needed to address the risks. Management assess risks as a part of designing and operating internal controls to minimize errors and fraud. Auditors assess risks to decide evidence needed in an audit.

Related Questions

Assume that management had determined that its organization'saudit committee is not effective. For example, Lehman Brothers,Inc., had weak directorswith little financial knowledge, and thosedirectors were not independent of management. How do the weaknessesin audit committee affect management's evaluation of internalcontrol over financial reporting? Would an ineffective auditcommittee constitute a materal weakness in internal control oerfinancial reporting? State the rationale for your response.

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56. Describe audit risk and the relationship between the three components.

30. Define internal control and explain its major components.

50. To obtain an understanding of the entity and its environment the auditor must perform risk assessment procedures. Describe typical procedures

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Oxalite Inc: A Cautionary Tail (Which is a fictional company)

For discussion purposes, treat Oxalite, Inc. as a public company. Based on this assumption, reflect on the following:

a. What were some internal control deficiencies and even material weaknesses? How would they have been discovered? What would be the implications for Sarbanes-Oxley Section 404 compliance?

b. Analyze this case using the COSO Fraud Risk Management Guide Principles 1,2 and 5 relating to the COSO internal control components of control environment, risk assessment, and monitoring.

2. How could the external auditors have helped avoid this adverse corporate governance outcome?

3. How could the internal audit function have helped evaluate the design and operating effectiveness of internal controls?

4.mr. n.g shankar, cae of the aditya birla group, a large conglomerate in india and a former member of the internal audit standards board of the IIA, has remarked,"Poor culture leads to organizational disaster." In what way was his observation justified in the case of Oxalite, Inc?

ADMS 4552 Study Guide - Internal Audit, Risk Assessment, Data General

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