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  • IT Audit Mind Map chp3

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    1) The document discusses internal control and the COSO framework. It defines internal control as policies, processes, and procedures set by management to achieve objectives relating to reliable financial reporting, operational efficiency, and compliance. 2) The COSO framework identifies 5 components of internal control - control environment, risk assessment, control activities, information and communication, and monitoring. It provides a structure for organizations to design, implement and evaluate their internal control. 3) The roles of management and auditors in relation to internal control are also outlined. Management is responsible for establishing and maintaining effective internal control while auditors understand and test controls to issue an opinion.

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    IT Audit Mind Map chp3

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    1) The document discusses internal control and the COSO framework. It defines internal control as policies, processes, and procedures set by management to achieve objectives relating to reliable financial reporting, operational efficiency, and compliance. 2) The COSO framework identifies 5 components of internal control - control environment, risk assessment, control activities, information and communication, and monitoring. It provides a structure for organizations to design, implement and evaluate their internal control. 3) The roles of management and auditors in relation to internal control are also outlined. Management is responsible for establishing and maintaining effective internal control while auditors understand and test controls to issue an opinion.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    3 views4 pages

    IT Audit Mind Map chp3

    Uploaded by

    No Ikh
    1) The document discusses internal control and the COSO framework. It defines internal control as policies, processes, and procedures set by management to achieve objectives relating to reliable financial reporting, operational efficiency, and compliance. 2) The COSO framework identifies 5 components of internal control - control environment, risk assessment, control activities, information and communication, and monitoring. It provides a structure for organizations to design, implement and evaluate their internal control. 3) The roles of management and auditors in relation to internal control are also outlined. Management is responsible for establishing and maintaining effective internal control while auditors understand and test controls to issue an opinion.

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    of 4

    WHY WE should Specific Objective

    WHAT is internal control? care about coso How to use


    A shortcoming in one or more "TO MANY Fraud"
    components and the relevant principle
    that reduces the likelihood that an
    Example WorldCom framework
    entity can achieve its objectives.
    Waste Management
    in 1992 : there is a
    financial report
    Control Enviroment

    Change
    Risk Assessment Enron
    Control Activities
    Information & Communication 2013 : Reporting ONLY
    Monitoring

    - Relevance of tecnology
    - Governance concept

    WHAT IS COSO
    - Anti-fraud
    - Expand reporting (extrernal,
    internal and financial report)

    INTERNAL Control (IC)


    Purpose to & OF

    RolE
    of internal control? to & OF

    Internal control are policies, process and procedure


    set by management to achive the following : Management Auditor
    Establish and mantaining IC Understand and testing control
    Relaibility of financial report
    IC provide resonable assurance
    Efficency and effectiveness (financial statment is corect) For public company: Need to issue an audit
    of operation Resonable assurance means the report on operating effectiveness of
    Highest level of assurance control. (section 404 B SOX)
    Compliance with Law
    and regulation Required by section 404 to publicy report
    non of internal control will be perfect
    Safe gurad of Asset becasue of inherent limitation &
    Collusion
    CONTIROL ENVIROMENT
    Action, policies and procedure that reflect
    the overall attitude of top managemnet,
    directors, and owners of the company about
    internal control and its importnace to the entity

    The organization demonstrates a commitment to integrity and ethical values.

    Independence from management and exercises oversight of the


    development and performance of internal control.

    Every departmnet must to have autorities and responsible

    Retain competent individuals in alignment with objectives.

    Holds individuals accountable for their internal control responsibilities.

    How can we learn about thier attitude?


    Auditor Role
    Risk are internal & external that threaten the
    accomplishment of objectives and specifically Determining how management identifies risk
    the risk relevant to the preparation of relevant to financial report.
    financial statement Evaluating their significant and
    likelihood of occurence

    Deciding the actions needed


    to address the risk

    RISK ASSEsSMENT Factor risk increase

    Rapid griwth of organization


    Auditor Role
    Determining how management identifies risk Change in technologies affecting production
    relevant to financial report. process or information system
    Evaluating their significant and Change in regulatory (SOX) or
    likelihood of occurence operating environemnt Change in key personal
    Deciding the actions needed
    to address the risk New accounting pronouncements
    Type of Control activities

    CONTIROL ACTIVITIES Adequate speration of duties.


    Proper authorization of transaction and activities.
    Policies and procedures that help ensure that necessary Adequate documents and records.
    actions are taken to address risk to teh achivemnet
    of the entity’s objectives. Physical control over asset and records
    Indenpenden checks on performance
    MAnualy Computer based system

    INFORMATION & CoMMUNICATION


    Identify and records all valid transactions.
    Should be in place for properly initiate,
    (completness and accuracy)
    record, process and report the
    entity’s transaction. Report transaction for financial reporting purpose
    (Cutoff)
    do this
    Prepare report that show the current effect of transaction
    (classification)

    identify situation when risk encountered outside company

    MONITORING Sources
    Activities deal with ongoing or periodic assessment of the Internal control Complaint
    quality of internal contriol by the managemnet to determine Expectation Feedback
    that controls are operating as intended and that they are Regulators
    modified as appropriate for changes in conditions. Variance

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