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Internal control (COSO control components (Information and communication,…
Internal control
COSO control components
Information and communication
Control activities
Monitoring
Risk assessment
Control environment
Types of internal control
Adequate documents and records
Authorise transaction
Safeguard of assets
Limit assess
Authorisation of transactions and activities
Give proof
Independent checks
Reviews
Segregation of duties
Prevent errors
Advantages
Comply with laws and regulations
Prevent resource loss
Achieve goals
Build reputation
Strategic plan
Vision
Lead fast-food chain in South Africa
Mission
Provide fast-food effectively
Strategic objectives
Satisfy customer requirement
Improve operational effeciencies
Definition
Committee of sponsoring organisation(COSO)
To provide assurance
In achieving objectives
Process designed
Institute of internal auditors
Manage risks
Achieve objectives and goals
Action taken by management
South African Instutute Of Chartered Accountant(SAICA)
Methods and procedures
Achieve goals
Objectives
Operational
Effective and efficient operations
Safeguard assets
Information should br reliable
Reporting
Reliable and transparency of reports
Compliance
Comply with laws and regulations
Methods for communication
Reports
Charts
Memos
Control activities
Preventive
Prevent errors
Include
Trustworthy
Segregation of duties
Prevent fraud
Control assets
Detective
Measure effectivenrss
Includes
Reviews
Comparisons
Records of performance
Corrective
From improper outcomes
Develop structures
Correct errors
Control in IT environment
Internal control objectives do not change
From manual to IT environment
Divided into
Application
Specific software programs and system
Designed to ensure
Accuracy
Authorisation
Completeness
Edit checks
Programed to ensure errors detect
Input,process and output controls
General control
IT environment as whole
Have pervasive effects
If they are weak negate effects
Example
System documentation control
Security related to IT
Hardware and software
Disadvantages
Cannot give assurance to achieve goals
Controls can be misleading
Cannot ensure succes
Responsibility
Management
Control aactivities
COSO framework(example) of IC structure
Designs and implement
External
Financial accounting system
Express an opinion
Internal
Evaluate effectivenes and efficiency
Promote continuous improvement
Standards of governance-risk contol
2100 Nature of work
Internal audit evaluate and contributeT
To improve governance
2110 governance
Assess and recommend
To improve governance