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NATURE OF INTERNAL AUDIT WORK (GOVERNANCE -RISK-CONTROL PROFFESSIONAL…
NATURE OF INTERNAL AUDIT WORK
COSO FRAMEWORK AND INTERNAL CONTROL PROCESS
5 INTERNAL CONTROL COMPONENTS
CONTROL ENVIRONMENT
the atmosphere where people conduct their activities and carry out responsibilities
PHILOSOPHY AND SYLE OF SENIOR MANAGEMENT
-Planning
-Organizing
-Controlling
-Directing
RISK ASSESSMENT
The risk must be identified measured and controlled
CONTROL ACTIVITIES
policies and procedures to mitigate risks
CLASSIFICATION OF INTERNAL CONTROL ACTIVIES
-Preventive controls(prevent undesirable event)
-Detective controls(Identify undesirable event)
-Corrective controls(reverse undesirable event)
TYPES OF INTERNAL CONTROL
-Segregation of duties(duty to be performed by different individual)
-Proper authorization of transaction and activities(to avoid improper use of organizational resources)
-Adequate documents and records(to prevent improper transactions)
-Safeguarding of assets(assets, other information must be protected)
-Independent checks(to control activities)
INFORMATION AND COMMUNICATION
MONITORING
GOVERNANCE -RISK-CONTROL PROFFESSIONAL GUIDANCE
(for this section,performace standard 2100 is discussed)
GOVERNANCE
RISK-MANAGEMENT
CONTROL
THE IMPORTANCE OF INTERNAL CONTROL
RESPONSIBILIY OF INTERNAL CONTROL
THE RESPONSIBITY OF EXTERNAL AUDITOR
-Evaluate and test
-To achieve audit related objectives
-To express opinion on financial stament
THE RESPONSIBILITY OF MANAGEMENT
-Should design internal control structure
-Implement internal control activities
-To meet organizational objectives
THE RESPONSIBILITY OF AN INTERNAL AUDITOR
-To assess and test the effectiveness of internal controls
-To achieve engagement objectives
AVANTAGES AND LIMITATIONS INTERNAL CONTROL
ADVANTAGES
-To achieve goals for profitability
-To prevent resource losses
-To ensure compliance of laws and regulations
-To promote reliable financial report
DISADVANTAGES
-Internal auditor cannot :
insure organization's success
reliability of financial reporting and compliance of regulations
CONTROL IN IT ENVIRONMENT
Most organization's use IT in the processing of financial and other information, The internal control objectives and principles do not change from manual environment to an IT environment