Professional Documents
Culture Documents
Lecture 3 Internal Control
Lecture 3 Internal Control
COSO
5 components
ERIPM or CRIME
Human error
Carelessness, distraction, mistakes of
judgment and misunderstanding of
instruction
Collusion
Collaboration between employee to commit
fraud
Management Override
. Management may override internal
control, abuse of power
Audit Risk Model
Internal Control
- The Auditor’s Perspective( ISA315)
Test of Control
The procedures to evaluate the operating
effectiveness of controls in support of a reduced
assessed control risk
Internal Control
- The Auditor’s Perspective( ISA315)
Narrative
Flowchart
Internal
control
Procedures manual questionnaire
and Organization Chart
Methods Used in documenting
the internal control system
Narrative-The understanding of internal
control may be documented in a
memorandum, appropriate if entity has
simple internal control
Flowchart-Provide a diagrammatic
representation or ‘picture’ of the entity’s
accounting system
ICQ-It contains questions about the important
factors or characteristics of the five internal
control
Procedure manuals and organization chart-
procedure manual to document entity’s
policies and procedures
Interim Audit
•If
control are found not operating effectively, auditor will
have sufficient time to reassess the control risk and modify
audit plan
•It
also give sufficient time for the auditor to inform
management on the likely misstatement
Interim Audit