Chapter 6 internal control evaluation: assessing control risk

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Chapter 6internal control evaluationassessing
control risk

• 3. Internal control elements
• control environment
• accounting system
• control procedures

2

• Control enviroment, ????
• ?????????????????????
• Accounting system, ????
• ??????????????
• Control procedures, ????
• ???????????????????
• ????,???????????????????????????????????????????
  

3
?6-3 ??????????

• 1.?????????????????????????
• 2.???????????????????
• 3.??????????????????????????,???????????????????,
  ??????????
• 4.???????????????????????????????????????????????
  ?
• 5.????????????????????????????,??????????????????
  ???
• 6.????????????????????????,????????????
• 7.?????????1??????????????12???????????1??????

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3.1 Control environment(????)

• ?????????
• ??????
• ??????,????????????
• ??????????
• ?????????,???????????????
• ????(??????????)?
• ???????????,???????????,????????????????????????
  ????

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3.2Accounting system(????)

• ???????????????????????
• ??????,???????
• ?data preparation, ????
• ?data entry, ????
• ?transaction processing, ????
• ?report production and distribution, ????????

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Audit trail

• ?????????????,???????????????,????????????????????
  ??????????????
• ????????????????
• Vouching????????????,????????????????????????
• Tracing????????,????????????????????,????????????
  

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3.3 Control procedures(????)

• ????????????????????????????,?????????????????????
  ??
• ??,???????????????????????????,??????????????,???
  ????????????

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4.Control objectives and procedures

• ?????????????????????,?????????,??????????????????
  
• ????????????????,???????????????????

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4.1 Control objectives

• ??????,??6-3?????????????????
• Validity ???
• Completeness ???
• Authorization ??
• Accuracy ???
• Classification ??
• Accounting ??
• Proper period ????

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?6-5 ?????? p198

• ????????????,???????
• E?????????????????????
• ?????????????,?????
• E????????????,?????????????
• ???????????????
• E??1000????????????????
• ---------

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4.2 Control objectives and assertions

• ????????????????
• ????????????????6-6
• P200

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4.3 Control procedures

• ????
• ??????
• ???????
• ??????

• P201 E6-6

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Chapter 6internal control evaluationassessing
control risk

• 5. Phases of control evaluation
• Phase 1understanding the internal control
• phase 2assessing the control risk
• phase 3performing test of controls audit
  procedures

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Internal Control Evaluation and Control Risk
Assessment
Obtain an understanding of the clients internal
control
Preliminary risk assessment



Control environment
Control procedures
Accounting system



Document the environment
Document the procedures
Document the system
Assess control risk (preliminary)
Perform test of control procedures

Not perform
-

Assess control risk below the maximum
Audit programs

Document the control risk assessment
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phase 1 understanding the internal control

• ?????????????????????????????????????????
• ?????????????????
• ??????????????
• ????????????????
• ?????????????????????????????????
• ???????????

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ACCOUNTING SYSYTEM

• ????????????
• ?????????????????
• ??????????????????????????????????????????????
• ???????????????
• (1)????????????
• (2)??????????
• (3)???????
• (4)??????????????????????????
•  

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Stopping the risk assessment work

• ??,??????????????????????????????????????1.0(100)
  .
• ?????????
• ??,???????????????????????????????????????(???????
  ?????)?
• ??????????????????????30?????40???

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Documentation of the control elements

• ??????????
•  ?Internal control questionnaire and narrative
• ???????????????????????????????????????????????
  ??,????????????,???????,?????????
• ??????????????,????????????????????,?????????,??
  ????????????????,??????????????

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Accounting and control system flowcharts

• ? p215?? , 216???
• ????????????????????,????????,???????
• ?????????????,?????????????????????????? 

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Phase2 assessing the control risk

• ???????????????(strengths)???(weaknesses)?
• ??(strengths),???????????,???????????????????
• ??(weaknesses),???????????,??????????
• ???????????????????????????????

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Test of controls procedures

• Test of controls procedures ought to be performed
  to obtain evidence about whether the apparent
  strengths actually are performed well.
• Test of controls auditing (phase 3) consists of
  procedures designed to produce evidence of how
  well the controls worked in practice. If they
  pass the auditors criteria, control risk can be
  assessed low.

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phase 1,2,3

• phase 1 and 2 can be described as dealing with
  the evaluation of the design of the system
  assuming it operates properly.
• phase 3 is a test of the actual operation of the
  systems.

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?Phase 3 performing test of controls audit
procedures

• ???????????
• (1)The required degree of company compliance with
  the control policies and procedures
• (2)The actual degree of company compliance.
•  
• The required degree of compliance,
  ???????,??????????????????

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• Test of controls procedure, to determine how well
  the companys control actually functioned during
  the period under audit.
• ??????????????
• Part 1 is an identification of the data
  population from which a sample of items will be
  selected for audit.
• Part 2 is an expression of an action taken to
  produce relevant evidence.
• ?6-14, ???????????

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Test of controls procedures

• Reperformance ????
• Inspection ????
• Observation ????
•  reperformance(????)???????????????????????????
• Inspection(??)????????????????
• observation (??)-----??????????????????????

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????????????
???? ???? ???? ????
???? ???? ???? ????
???? S N/A P
????? P S N/A
?? P S N/A
???? S N/A P
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??????????
??????? ?????????
???? 2-4
???? 3-8
???? 4-10
???? 10-15
?????1000??? 25-50
?????1000??? 50-100
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Control evaluation and cost/benefit

• ?????????????????????????,??????
• ?????????????????????????
• CICA????????????????,?????????????????????????

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Dual-purpose test

• ?????????????????????????,???????????(?????????)?
• ??,?????????(1)?????,????,?(2)????????????????????
  ????????????????????????????????????????????????,?
  ??????????,???????????

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Internal control in small business

• ????????????????????????????,??????,??????????????
  ?????
• ????????????,?????????????????????,?????????????
  ????
• ?????????????,?????????????????