MGAD30H3 Chapter Notes - Chapter 1: Risk Assessment, Internal Audit, Financial Audit

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Published on 9 Jul 2013
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Chapter 1 Auditing and Internal
Control
Overview
Description into IT auditing
Differences between auditor assertion testing and advisory services
IT structure: the relationship between management assertions, audit objectives, test
of controls, and substantive testing
COSO control framework, defining internal controls for manual and IT environment
Audit issues and implications re Sarbanes-Oxley and links general/application
controls and financial data integrity
External (financial audits)
Provides an opinion regarding the presentation of financial statements known as
attest service
The audit objective is always associated with assuring the fair presentation of
financial statements
A key concept is independence
Attest Service versus Advisory Services
The requirements of attestation services: require written assertions and a
practitioner’s written report, formal establishment of measurement criteria or their
description in the presentation, levels of service in attestation engagements limited
to examination, review, and application of agreed-upon procedures
Advisory services to improve their client organizations’ operational efficiency
and effectiveness
IT risk management responsible for providing IT control-related client support
o Dual role: provide nonaudit clients with IT advisory services and also work
with the firm’s financial audit staff to perform IT-related tests of controls
Internal Audits
As an independent appraisal function established within an organization to examine
and evaluate its activities as a service to the organization
Answers to executive management of the organization or the audit committee of the
board of directors
External vs. Internal Auditors
Difference lies within respective constituencies: external represents outsiders and
internal represent the interests of the organization
If internal audit reports to controller, independence is compromised.
The role of the audit committee
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Document Summary

Differences between auditor assertion testing and advisory services. It structure: the relationship between management assertions, audit objectives, test of controls, and substantive testing. Coso control framework, defining internal controls for manual and it environment. Audit issues and implications re sarbanes-oxley and links general/application controls and financial data integrity. Provides an opinion regarding the presentation of financial statements known as attest service. The audit objective is always associated with assuring the fair presentation of financial statements. Advisory services to improve their client organizations" operational efficiency and effectiveness. It risk management responsible for providing it control-related client support: dual role: provide nonaudit clients with it advisory services and also work with the firm"s financial audit staff to perform it-related tests of controls. As an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization. Answers to executive management of the organization or the audit committee of the board of directors.

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