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Internal Controls (Definition (Internal controls encompasses entity's…

- - - - Occurrence, rights and obligations, existence
    - - Accuracy, completeness, valuation and allocation
    - - accuracy, valuation and allocation
    - - accuracy, valuation and allocation, classification
    - - accuracy, valuation and allocation
    - - accuracy, classification, valuation and allocation
    - - cut - off, completeness
- - - - Control: Three way match between purchase order, delivery document and invoice
        
        Assertion: completeness, occurence
- - - - Culture, structure and discipline of an entity
      - The implementation and effective use of internal controls within the entity
    - - How does the entity identify, respond to business risks
      - How does management identify, analyse, and manage risks of financial reporting
    - - Designed to capture and provide information and managen and control entity's oprerations
      - Includes manual and operated systems
      - Auditor is interested in those that are relevant to financial reporting
    - - Policies and procedures that help make sure management's directives are carried out
        
        Performance review - actual vs budget, investigation of differences
        
        Information processing - Manual or automated to check accuracy
        
        Physical control - secuity of assets etc
        
        Segregation of duties / incompatible duties - no one employee should be in position to perpetrate a fraud
    - - Do management monitor controls and modify then as required?
      - Periodic evaluations?
      - Do client staff regularly obtain evidence of control functioning
      - Management acts on audit recommendations or respond to control difficulties on a timely basis