Internal Controls

IFTA Audit Manual Section A640

IRP Audit Procedures Manual(APM)
Section 502
Michele Deering-Volz - CA
Mark Howshar - WY
Marc Walker - NB

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Internal Controls
Defined
Why Evaluate
Case Study

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Definition of Internal Controls
a process for assuring
achievement of an organization's
objectives in operational
effectiveness and efficiency,
reliable financial reporting, and
compliance with laws, regulations
and policies.
 APM Section 502/IFTA A640

The Auditor must test the

effectiveness of internal controls.
Based on the result of these tests, the
auditor should make an assessment of
the degree of reliance that can be
placed on the internal controls

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Strengths and weaknesses
identified in the Registrant’s
distance accounting system must
be documented in the Audit file.
 RECORDKEEPING SYSTEM

The auditor should perform a

Walk-through test .

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 Walk-Through
(i)…select one or more source
documents to follow through the
entire process
(ii) …ask to review each point
where some action is taken

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 Case Study Introduction
Distance Record Example Unit 8 – 1st ’11

1st ‘11 Summary – Unit 8

 Purpose of Walk-Through
• Better understanding of the detailed
operations
• What error types are possible
• What controls would detect these errors
• Does the registrant employ these
controls

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 Evaluate…

Are the controls effective and

functioning as described?
Can the system be audited?

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 IFTA A640.300
Tests of Compliance

If controls are inadequate to permit

reliance, the auditor may make a
more extensive review and perform
tests of compliance.
If weaknesses identified in the
preliminary evaluation preclude
reliance, or if the auditor believes that
more efficient or effective audit tests
are possible without reliance, the
auditor will plan audit procedures
without any further study and
evaluation of accounting control.

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 Case Study Files
• Prepare/Maintain Records Agreement
• ABC Co IFTA Workpaper Workbook
• ABC Co Internal 2011 Calculation
• ABC Co Summary Information
• ABC Co Summary Subset - 37, 8, 55
• ABC Co Email conversations
 Case Study / Questions
• Case Study Resolution
• Questions?