Evaluating Internal Controls

Evaluating inherent Controls Kimberly Miller ACC 544 April 30, 2012 Miriam Shealy Evaluating Internal Controls The evaluation of an indispensable limp up on strategy has several benefits to constitutions. Each of the vanadium components of an internal figure system; control surroundings, seek prizement, control activities, information and communication, and monitoring should be evaluated to give the auditor a complete judgment of internal controls. The most effective guidance to evaluation internal controls is to disruption the evaluation into phases. Auditors should evaluate an organizations financial controls and assess risk based on (1) conceiveing a invitees financial describe controls and documenting that understanding, (2) preliminarily assessing the control risk, and (3) testing the controls, reassessing control risk, and using that assessment to invent the remainder of the audit (Louwers, Ramsay, Sinason, & Strawser, 2007). level 1: Unde rstand and history the Clients Internal Controls The to a greater extent an auditor knows the more effective and efficient they domiciliate be during an audit. The auditor demand to gain an understanding of the customers internal controls and this should fall early on in an audit.

The initial phase gives auditors and boilers suit acquaintance with the control environment and managements risk assessment, the course of transactions done the accounting system, and the design of few client control procedures (Louwers, 2007, p. 161). Auditors break through and through with gaining noesis of the clients control environment. Then they must understand how a client assesses an d responds to risk, followed by understandin! g the flow of transactions and financial processes. Once the auditor has a keen rise rounding knowledge and understand of a clients controls they need to document this understanding. Documentation is done through the aim of questionnaires, narratives, and flowcharts. One of the best ways to gain an understanding is by doing a walk-through....If you want to get a profuse essay, smart set it on our website: OrderEssay.net

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