Auditing Bits in Bytes Session 3: Internal Control Considerations (17W621-13)
Description
Auditing Bits in Bytes™ is a series of eight individual sessions that
guides professionals through the complete audit process from “A to Z” –
starting with Pre-Engagement Planning Activities, and going all the way
through Wrap-up and Quality Control. The auditing profession is
undergoing the most significant changes in modern history. Think about
it. The Auditing Standards Board issued 14 new Statements on Auditing
Standards all effective within two years of each other, the GAO revised
Government Auditing Standards (twice!) in 2007, the PCAOB has six
additional Auditing Standards related to audits of SEC “issuers” that
directly influenced standards established for “non-issuers”,
independence rules promulgated by all relevant standard setters have
been clarified and enhanced, and Statements on Quality Control Standards
for firms performing attestation services have also been revamped and
strengthened. Whew! That is a lot! And to think that professionals
complained about being confused before all these changes occurred!! All
professionals, both those that are new to performing financial statement
audits and those with previous experience, can benefit from focused
training that walks participants through the complete audit process from
“A to Z”, providing practical tips and best practices for ensuring an
effective and efficient financial statement audit in compliance with
relevant professional and regulatory standards.
Learning Objectives
Session 3 of this eight-part series focuses on important internal
control considerations
This includes both evaluating the design and
implementation of internal controls, which is required on all
engagements
It also includes testing controls for operating
effectiveness, which should be considered as part of the risk assessment
procedures
This area is one of the most commonly misunderstood and
misapplied aspects of the audit process, particularly given the recent
significant changes in auditing standards
Inappropriate or inadequate
judgment calls made at this stage of the engagement could have the
greatest impact on financial statement audit effectiveness and
efficiency
Missteps in this area also have the greatest likelihood of
being identified as deficiencies in peer or regulatory review
Major Topics
Evaluating the Design & Implementation of Internal Controls
The
typical types and flow of an internal control system o Documenting an
understanding of the design of internal control, including both
entity-level and transactional-level internal controls
Identifying the
key controls that significantly reduce the possibility of material
misstatement due to fraud or error
Appropriately verifying that key
controls have been implemented
IT control considerations, including
general and application controls
SAS 70 special considerations
Testing Controls for Operating Effectiveness
What audit evidence is
required to reduce control risk below high
Understanding when a
control reliance strategy may be either necessary or desirable in an
audit plan
The impact of reduced control risk on the nature, timing
and extent of substantive audit procedures
Relationship of Internal
Controls Testing Concepts to Compliance Testing - Differentiating the
purpose and requirements related to these two different procedures