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The stages of auditing are as following:
Determined the audit approach:
1. The scope of the audit and auditors’ general approach should be determined. Letter of engagement setting out the terms of the audit, audit strategy to be placed on the audit file.
Understand the entity
2. Obtaining information to assess the risks of material misstatement in the financial statements.3. Determine the flow of documents and extent of controls4. Prepare comprehensive record for evaluation of the systems.5. Confirming on the system record and operation
Assess the risk of material misstatement
6. Assess the reliability and formulate a basis for testing
Select audit procedure to respond to risk of material misstatement
7. If controls are assessed ineffectively then auditors should go on to carry out full substantive procedures.8. Prepare and send a report to management identifying weakness and recommending improvement. 9. Auditor should carry out substantive procedure on material items
Review the financial statements
10. Determine whether the financial statements are consistent with auditor understanding.11. Report to member is the end product which auditors express their opinion of the accounts.12. Report to management is an additional end product of the audit for suggestions of improvements
The differences between External and Internal Auditors:
External InternalIndependence Appointed by shareholders Appointed by management
Responsibilities Fixed by law Set by managementReporting Member (shareholders and
other users)Management (directors)
Scope of work Express an opinion on truth and fairness of accounts
Consider whatever financial and operational areas
management determinesInternal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
A risk-based approach is taken which involves identifying the risks which may prevent the organization from meeting its objectives.
Audit Committees’ responsibilities:
1. To monitor company’s financial statement and performance2. To review internal financial control3. To review internal control and risk management systems4. To monitor and review the effectiveness of internal audit5. To make recommendation on the appointment of external auditors6. To approve the remuneration and terms of engagement of external auditors
7. To review and monitor the independence and objectivity of the external auditors and the effectiveness of the audit process.
8. To develop and implement policy on the engagement of the external auditor to supply non-audit services.
9. To report to the board on any matter, improvement, and recommendations.
The law gives certain parties some remedies in the event of the auditors making a mistake, and remedies fall into 2 categories:
1. Key claimant is the company because auditors signed a contract with company
2. The third parties, the auditor can only liable to them, if the auditor is aware of the existence of them, and they were relying on auditor report
Statutory Duties
To report on the truth and fairness of financial
statementTo ensure that
director is consistent
To ensure company has kept adequate accounting record
To ensure the inclusion of
director responsibilities in
the financial
To ensure branches of company has given sufficient
information
To ensure the underlying records mate with the
financial statement
Main Duty
Company ShareholdersAuditorContract
ContractAuditors Company
Individual shareholders
Potential shareholders
The bank
Other lenders
Company Law to Directors
Directors are required by law to:
1. Select suitable accounting policy and apply it consistently
2. Make judgment and estimate reasonable and prudent
3. State in any material departure (change from standard) disclosed and explained in financial statements
4. Prepare financial statements on the going concern basis.
Directors’ Responsibilities
Keep proper accounting records
Ensure the financial statements comply with law
Safeguard the company’s assets
Prevent & Detect fraud and irregularities
Fraud
Intentional misstatementUnintentional misstatement
Fraudulent financial reporting
Misstatements resulting from misappropriation of
assets
Forgery
Deliberate failure record
Intentional misrepresentation
Collusion
Requirement to Auditors:
1. Professional skepticism2. Discussing among the engagement team3. Risk assessment procedure and related activities
Auditor should perform some of the following procedures:
1. Make inquiries to managementa. Management’s assessment of riskb. Management’s identifying and responding to riskc. Management’s communication to governances and employee
2. Question management if they aware of any actual, suspected or alleged fraud3. If there are internal auditors, external auditors should ask them if they aware of actual,
suspected, or alleged fraud, obtain their view about risk of fraud, and procedures performed4. Make enquiries to other operating personnel not involving in governance.5. Obtain an understanding of how those governance oversights the processes of identifying and
responding to fraud & internal control in place.6. Make inquiries to governance if they aware of the actual, suspected, or alleged fraud.7. Consider unusual or unexpected relationships8. Consider if other information obtained risks9. Evaluate the risk assessment procedures and related activities performed indicate risk of fraud.
Internal Auditors’ responsibilities for fraud:
1. Prevent fraud by assessing the adequacy and effectiveness of control systems2. Detect fraud by being mindful when carry out work3. Reporting any suspicions
Express term in the engagement letter would include:
1. Management’s responsibilities in preparing fair financial statement (IFRSs)2. Provide auditors with access to all documents3. Provide auditors with unrestricted access to persons within the entity.
Implied terms (3R) always exist in the contract:
1. Duty to exercise Reasonable care (means following)a. use general accept auditing techniquesb. investigate if any suspiciousc. act honestly and carefully when making judgment
2. Duty to carry out the work required with Reasonable expediency (方便)3. Right to Reasonable remuneration
Claiming against auditors need 3 things:
Company Third parties1. Duty of care : express in contract &
enforce by law2. Negligence: judge by the professional
standard by day3. Damages: client suffered some monetary
loss
1. Duty of care : without a contract but in case
2. Negligence: judge by the professional standard by day
3. Damages: client suffered some monetary loss
Eligible as an auditor:
1. Holding appropriate Qualification (individual), or firms controlled by qualified persons2. Fit (competence and capacity) and proper (character and suitability) persons3. Works is conducted Properly with professional integrity 4. Technical standards (eg. ISAs)5. Maintain an appropriate level of Competence (CPD)6. Prevent individual not holding appropriate Qualification, and not a member of the firm
The regulatory body should monitor and enforce compliance include provisions relating to:
1. Admission (加入) and expulsion (开除) of members2. Investigation of complaints against members3. Compulsory professional indemnity (损害赔偿) insurance
In each visit of the regulatory body to monitor the auditors should be as following: Proper structure of audit approach Carefully instituted quality control procedures Ethical guidelines Technical excellence Fit and proper criteria Peer review (audit files are review by another partner in audit firm)
o Hot review is carried out before report is signed by peer.o Cold review is carried out after report is signed by independence person
Appropriate fee
IFAC
National level
UK
ACCA ICAEW ICAS CIMA
France
Accountants Auditors
Gernany
ICPA
USA
AICPA
Ghana
ICA(Ghana)
Singapore
ICPAS
EU member states
RSBs
International Level
IAASB
The purpose of review is to ensure that:
- Audit work is in line- Sufficiently documented- Issues resolved and reflected in audit conclusion- Objectives were achieved- Conclusion support audit opinion and reflect finding of the audit
International Standard on Auditing (ISAs) contains:
- Basic principle- Essential procedures- Guidance of explanatory & other material
ISAs do not override the national regulation:
- If ISAs conform with local regulation, then it is automatically comply with ISAs- If ISAs differ from local regulation, as you are auditor should comply with ISAs but try to encourage
changes in local regulation.
ACCA Code of Ethic and Conduct:
- Integrity: straightforward and honest- Objectivity: unbiased, conflict of interest, undue influence of the others or business judgment.- Professional Competence and due care: maintain professional knowledge on current development in
practice, legislation, and techniques, act diligently or thoroughly and in accordance with standard.- Confidentiality: respect the confidentiality of information, not disclosed information to third parties.- Professional behaviors: comply with regulation and law, avoid act that discredits profession.
Threats to the independence as auditors: (SSAFI)
- Self-interest eg. Financial interest- Self-review eg. Review by the same person- Advocacy- Familiarity eg. long association, acceptance of gift - Intimidation eg. Dismissal
Other services of Audit firms:
1. Preparing account & financial statement2. Valuation services3. Taxation services4. Internal audit services5. Corporate finance services6. IT services7. Temporary staff cover8. Recruitment services
Accountants of Assurance client and Assurance firm are not allowed to:
Accountants Assurance Firms- Authorize on the transaction- Implement any recommendation- Reporting as management capacity
- Determines and change journal entry without approval
- Authorize transactions- Prepare source document
Information required should be disclosed except where:
- Consent has been obtained- Public duty- Legal or professional right or duty
Obligatory disclosure Voluntary disclosure- Treason- Terrorism or money laundering- Noncompliance with law and regulations
- Made by member- Protect member’s interest- Process of law- Public duty
Procedures before Acceptance audit work
professionally qualified
existing resources adequate
obtain references
communicate with present auditors or previous
auditors
procedure after accepting
nomination
ensure the removal or resignation of auditor was
properly conducted
ensure new auditor appointment is valid
submit a letter of engagement
Contrast low and high risk client
Client screening
1/ factor to consider (MERRA) are following:
1. Management integrity2. Engagement economic3. Risk4. Relationship 5. Ability to perform the work
2/ Approval
Audit Engagement Letter should content of:
1. Objective and scope of audit2. Auditors’ responsibilities3. Management’s responsibilities4. Finance reporting framework management adopted5. Form of any report to be issued by auditors6. Inherent limitation of an audit that some material misstatement may remain undiscovered7. The unrestricted access to all documents and persons within the entity
New Audit Engagement letter should include factors following:
1. Misunderstand in object and scope of audit2. Revise or special term of engagement3. Change of senior management4. Significant change in the nature or size in client business5. Legal requirements6. Change in the financial reporting framework
Low risk
good long term prospects
well-financed
strong internal controls
conservative, prudent accounting policies
competent, honest management
few unusual transactions
HIgh risk
poor recent or forecast performance
likely lack of finance
significant control /weaknesss
doubtfull accounting policies
lack of finance director
significant related party or unexplained transactions
Understanding Entity and its environment by MINIO
Understanding entity and its environment
Industry, regulatory and other external factor
Nature of the entity
Objectives and strategies and relating
business risks
Measurement and review of the
entity’s financial performance
Internal Control
FFIBFinancing
InvestmentsFinancial reportingBusiness operation
2EExistence of objectives relating toEffects of implementing strategies
Key ratio/operating statistics, key performance indicators, trend, forecasting, budgets,
variance, analyst reports and credit rating report,
competitor analysis, financial performance from period to
period
Entity’s policies, accounting system
MECC
- Control activities- Monitoring of
controls- The control
environment- Entity’s risk
assessment process
LMARLLevel of Economic Activities
MarketsAccounting policies
Regulatory frameworkLegislation
Analytical procedures consist of evaluations of financial information made by a study of plausible (貌似真实的) relationships among both financial and non-financial data, and encompass (包含) the investigation of identified
fluctuations and relationships that are inconsistent with other relevant information or deviate (脱离) significantly from predicted amounts.
Audit Risk (AR) = Inherent Risk (IR) x Control Risk (CR) x Detect Risk (DR)
Audit risk is the risk that auditors give an inappropriate opinion on the financial statementInherent risk is the susceptibility of an assertion to a misstatement and that could be material individually or when aggregated with other misstatements, assuming there were no related internal controls.Control risk is the risk that a misstatement that could occur in an assertion and that could be material individually or when aggregated with other misstatements, will not be prevented or detected and corrected on a timely basis by the entity’s internal control.Detect risk is the risk that the auditors’ procedures will not detect a misstatement that exists in an assertion that could be material, individually or when aggregated with other misstatement Business risk is the risk inherent to the company in its operations. It is risks at all levels of the business.Sampling risk arises from the possibility that the auditor’s conclusion based on a sample of a certain size that difference from the entire population.Non-sampling risk arises from factors that cause the auditor to reach an erroneous conclusion for any reason not related to the size of the sample.
Audit risk Business riskIs focus only financial statement and exists only relation to the opinion given by the auditors
Is risk which affect organization directly, arises from operations and present at all time
The factors indicate that a risk might be significant risks are:
- Risk of fraud- Relationship with recent developments- Degree of subjectivity in financial information- Unusual transaction
o Management interventiono Complex accounting principles or calculationo Manual interventiono Opportunity for control procedures not to be allowed
- Significant transaction with a related party- Complexity of the transaction
Risk of material misstatement
CompanyFinancial Statement
Auditors
Inherent risk + Control risk
Detection risk not find by auditor
Sampling risk is in the detection risk, when auditor
cannot detect risk in sampling
Auditors must formulate:
- Overall responseso Emphasizing to audit staff to maintain professional skepticismo Assigning additional or more experienced staff to the audit teamo Using expertso Providing more supervision o Incorporating more unpredictability into the audit procedures
- Detailed further audit procedure1. Tests of controls to obtain sufficient and appropriateness audit evidence
a. Reperformance and inspection are useful procedure2. Substantive procedures (on material items)
a. Analytical procedures i. Large volumes of predictable transactions
b. Other procedures (tests of detail) i. Class of transactions, account balance and disclosure
ii. Agreeing FS to the underlying accounting recordsiii. Examining material journal entriesiv. Examining other adjustments made in preparing the financial statementsv. Identifying the significant risks
Audit Risk If the auditors do not identify the
misstatement they could give an incorrect opinion on the financial statement
Detection RiskRisk that the
auditors do not detect the error in
the inventory
Financial statement RiskFinancial statements maybe
materially misstated
Inherent Risk
Control RiskThe internal controls may not detect the error in the
inventory figure
Business Risk
Directors set up controls to ensure inventory is valued
correctly
Risk that sales do not recover
Affects
Value of inventory
Impacts
Inventory maybe overstated
If it doesn’t improve going concern
question
Economic downturn
Sale price of product fall
Affects
Value of inventory
Auditors may carry out their audit work for one year in 2 or more sittings (interim audit & final audit)
Interim audits are audits undertaken prior to the final audit, often during the period under review and test of control is likely to be carried out at the interim audits.
Final audit is the main period of audit testing, when work is focused on the final financial statement
Auditors determine the where material misstatements are most likely to arise, and the nature, timing and extent of their testing as following:
- Obtain an understanding of the entity and its environment- Assess the risks of material misstatements - Respond to those risks
Auditors respond to assessed risk through audit strategy (general approach) and audit plan (detailed testing approach)
Audit evidence is all of the information used by the auditor in arriving at the conclusion on which the audit opinion is based, and include information contained in the accounting records underlying the financial statements and to the information.
Objective of auditor is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion. Sufficient measure quantity of audit evidence, Appropriateness measures quality or relevance and reliability of audit evidence. Audit evidence indicates what is probable (persuasive) rather than definite (conclusive)
Auditor just only give a reasonable assurance on the financial statement is free from misstatement for following reason:
- Auditor do not check very items because too time consuming - Limitation of accounting system and internal control (accounting record may not full of detail and
accounting system may be operated by person who do not full understand of system)- There is collusion which directors and staffs do not tell the true- Audit evidence just indicate a probable not a certain.- Auditor may need expert’s assistance.
Factors auditors consider to sufficient and appropriate evidence are:
- Risk assessment- Materiality- Past experience- Source & reliability of information
System based approach (Combined approach) is an approach to audit which seeks to place reliance on the accounting systems of an entity. (Test of control + substantive procedures)
Direct verification approach (Substantive approach) is an approach which does not place reliance on systems, where the auditor only verifies individual transactions and balances in the financial statements.
Balance sheet approach is common substantive approach focus on the statement of financial position
Test of controls are test about 2 aspects of accounting system & internal controls
1. Design : capable of preventing and detecting material misstatement2. Operate : operation’s effectiveness of system
Substantive procedures are tests to detect material misstatement:
1. Analytical procedures2. Other procedures (classes, a/c balances, & disclosures)
Financial statement assertions based on the assets, liabilities and transactions of client, and the event that affect client’s account.
Assertions (ACCA-VOCER)Classes of transaction and events for the period under audit
Account balance at the period end
Presentation & disclosure
Occurrence Existence OccurrenceCompleteness Right & obligations CompletenessAccuracy Completeness ClassificationCut-off Valuation & Allocation Accuracy & valuation ACCA-VOCER Accuracy, Completeness, Classification, Allocation, Valuation, Occurrence, Cut-off, Existence, and Right & obligations.
Management’s experts Audit’s expertsWhose field is used by the entity to assist the entity in preparing the financial statements
Whose works is used by auditors to assist the auditor in obtaining sufficient appropriate audit evidence
Reliability of evidenceWODCE
External sourcesControl system operated effectivelyDirectly by auditorsWritten documents & representationsOriginal documents
Inspection of assets
Inspection of documentation
Observation
Inquiry
External confirmation
RecalculationReperformance
Analytical procedures
Materiality should be calculated at the planning stage of the audit and based on experience and judgment, and should be reviewed during the audit. Materiality provides a threshold or cut-off point rather than being a primary qualitative characteristic.
Performance materiality means the amount set by the auditors at less than materiality for the financial statements as whole to reduce risk to low level.
Certain types of error should be investigated even if they are small in monetary terms but they are important for the other reasons:
- Recurring errors indicate weakness in the accounting system- Errors mean breach the statutory requirements- Critical point errors (loss in profit)- Conceptual errors (breach accounting system)
Calculation of planning materiality guideline:Revenue: 0.5 – 1 %Gross profit: 0.5 – 1%Profit before tax: 5 – 10% Net assets: 2 – 5%Total assets: 1 – 2%
Audit strategy Audit planSets the scope, timing, direction, and guide development to detailed audit plan
Convert audit strategy into detail plan include nature, timing and extent of audit procedures to reduce risk to accepted low level.
Establishment of audit strategy:- Characteristics of engagement
o Frameworko Industryo Location of components
- Objective of engagemento Deadlineo Expected communication date with
governance- Engagement team’s efforts
o Materiality levelso High risk areaso Material components & a/c balanceo Reporting/industry specific
development- Results of preliminary engagement
o Auditors’ independenceo Management integrity issues
- Ascertain the nature, timing, and extent of resources to perform engagement
o Resources requiredo When and where the resources will be
deployed & how they are managed, directed, and supervised.
Objective of planning:Appropriate attention is devoted to difference
areas of auditPotential problems are identifiedWork is completed effectively and efficientlyTasks are proper assigned.
Structured approach to planning stages:- Updating knowledge of client & assessing risks- Preparing the detailed audit approach
Making administrative decision such as staffing & budgets.
engagement partner
(reporting partner
Audit Manager
Supervisor/audit seniors
Audit assistant
Engagement partner is to ensure that audit staffs:
- Are carried out level of professional skepticism.- Proper communication for both audit team and
audited entity
Audit Strategy
Nature
Timing
Direction
Guides
Audit plan Convert
Scope
Extend
Audit procedures to performance to obtain
Sufficient and appropriate
audit evidence
Acceptable low level audit risk
To reduce
Expert’s engagement in the auditing as following:
- Provide specialist advice to client on particular matter- Help auditors to obtain sufficient appropriate audit evidence
The needs of using expert’s work are:
1. Valuation of certain type of assets2. Actuarial calculation of liabilities associated with insurance contracts or employee benefit plan,
environment liabilities, clean-up costs, contracts, laws and regulations3. Analysis of Complex or unusual tax compliance issues
Assessment the professional of the expert may as following:
1. Personal experience2. Discussion with that expert3. Discussion with other auditors expert familiar with4. Knowledge of qualifications, membership of professional body or industry association, license to
practice, or other form of external recognition5. Published papers or book written by that expert6. Expert ‘s firm’s quality control policies and procedure
Expert’s term of reference may cover by following:
- The nature, scope and objectives of that expert’s work- The roles and responsibilities of auditor and expert- The nature, timing and extent of communication between auditors and expert- The need of observing confidential requirement
Assessment of expert’s finding compare to financial statement assertion
- The source of data- Assumption and method used- When work is carried out- The reason for any changes in assumption and method- The result of work in the knowledge of business and other procedures.
ISA states that “while the objectives of the internal audit function and the external auditor are different, some of the ways in which the internal audit function and the external auditor achieve their respective objectives maybe similar.”
Internal auditor operates in one or more of the following area:
1. Review the accounting and internal control system2. Examine the financial & operational information3. Review of economy, effectiveness, and efficiency4. Review of compliance with laws and regulations5. Special investigations
Determining adequacy of internal auditors’ work:
1. The objectivity – to whom report2. Technical competence – technical training3. Professional due care – properly planned, supervised, reviewed and documented
4. Effective communication between internal and external auditor
Computer control and auditing:
1. Auditing around computer: A sample of inputs will be checked to outputs, and vice versa. If they prove to be accurate then assumed that system of control is effective and operate properly.
2. Auditing through computer: examine the detail processing routine of control in the system if adequate, and this should use Computer Assisted Audit Technique (CAAT)
3. Auditing with computer: using CAAT (audit software + tests data)
Audit software:
1. Interrogation software – access client data2. Comparison programs – compare program’s version3. Interactive software – online system’s information4. Resident code software – stay permanently in client system
Test data:
1. Data processing valid transaction – produce required documentation and update a/c record2. Data processing invalid for any reason
Sampling
Sample sizes for test of control Sample sizes for substantive procedureTolerable misstatement rate Tolerable misstatement rateExpected misstatement rate Expected misstatement rate
Population value & stratificationMisstatement means either control deviations, when performing tests of controls, or misstatements, when performing tests of details.Expected misstatement – the auditor expects to be present in the population.Tolerable misstatement – maximum misstatement in the population auditor would be willing to accept.Anomalous misstatement – arises from an isolated event that has not recurred other than on specifically identifiable occasions and is therefore not representative of misstatements in the population.
There are 2 types of sampling, statistically based (use techniques from which mathematically constructed conclusions) Non statistical method (auditor draw judgmental opinion about population)
Statistical sampling has the following characteristic
1. Random selection2. Use of probability theory
Population is entire set of data, sample is selected, and auditor uses to draw conclusion.
Sampling units are individual items.
The auditors are faced sampling risk in:
a. Test of control, controls are more effective than they actually are or test of details that a material error does not exist when in fact it does – this is risk of Audit effectiveness.
b. Controls are less effective than they actually are or test of details that a material error exists when it does not – this is risk of Audit efficiency.
Statistical samplingAdvantages Disadvantages
- Definite level of confidence at the conclusion of auditors’ test
- Sample size is objectively determined- Clarify their audit objectives- Results of tests can be expressed in
mathematical term- Bias is eliminated
- The technique may be applied blindly- Unsuspected patterns or bias in sample
selection may invalidate the conclusion- Need frequently back-up- At the conclusion of statistical sampling based
test the auditors may fail to appreciate the further action necessary based on the results obtained.
- May be applied carelessly- Time consuming on selection- The degree of tolerance of acceptable error
must be predetermined
Audit sampling- less than 100%
& each units have a chance
of selection
Random selectionuses random number tables or computerised generator to select the sample
systematic selectionconstant inteval between selections, the first interval have random start
haphazard selectionauditor select items randomly by himself
sequence or block selection used to check whether certain items have particular characteristics
The reasons why auditors use working paper to record their works are:
a. Reporting partner needs make sure that work delegated by him has been properly performed.b. They provide as reference for audit problems encountered. c. They are invaluable in the event of litigation against them by either the client or some third party.d. They are not only assisting in the control of current audit but well for planning and control of
future audit.e. Preparation of working papers encourages the auditors to adopt a methodical approach, which to
improve the quality of that work.
The auditor must prepare audit documentation that is sufficient to enable an experienced auditor to understand:
1. The Nature, timing and extent of the audit procedures performed to comply with the ISAs and applicable legal and regulatory requirements.
2. The results of the audit procedures performed, and the audit evidence obtained; 3. Significant matters arising during the audit and significant professional judgments made in reaching
those conclusion.
Working papers
Audit planning & procedures
Audit evidence
Supervision and review
Are prepared by and for, or obtained and retained by, the auditor in
connection with performance of the audit. It in the form of data stored on paper, film, electronic media or other
media
Nature of procedure to be performedSize and complexity of the entity
The identified risks of material misstatementsJudgment on the work and evaluating results
The significance of the audit evidence obtainedThe nature and extent of exception identified
Affect to the form and content
Working paper
Working paper headed with Content of the working paper1. Name of client2. Balance sheet date3. The file reference4. Prepare person name and date5. Subject6. Name of reviewing and date
1. Objective2. Sources of information3. How sample was selected and the size4. The work done5. A key to any ticks or symbols6. Appropriate cross referencing7. The results obtained8. Analysis of errors9. Conclusions drawn10. Key points highlighted
Automated working paper packages can make the documenting of audit work much easier by automatically cross reference and balanced by the computer.
The advantages of automated working papers are as follows:
1. Reduce the error risk2. It will be neater and easier to review3. Save time, computer will summarize the key analytical information4. Standard form can be called up on the screen5. Audit working paper can be transmitted electronically.
Control Environment
communication and
enforcement of integrity and ethical value
commitment to competence
participation by those charged
with governance
management's philosophy and operating style
organizational structure
assigment of authority and responsibility
Human resource
policies and practices
Document a conclusion not readily from work perform or audit evidence obtainedThe audit methodology and tools used
Current audit files: contain information of relevance to current year’s audit.
Permanent audit files: contain information of continuing importance to audit.
Setting up internal control in accounting system to assess the following:
1. Transactions are properly authorization2. They promptly recorded at the correct amount, correct account, and proper accounting period.3. Access to assets is proper authorized4. Recorded assets are compared with the existing assets.
Control activities
approval & control of documents
control over computerised applications
checking the arithmetical accuracy of
records
maintaining and reviewing control accounts and trial
balances
reconciliations
comparing the results of cash,
security and inventory counts with accounting
records
comparing internal data with external
sources of information
limiting physical access to assets
and reords