| Professional standards identify internal control deficiencies as either, what? | (1) a deficiency in design
(2) a deficiency in operation |
| Define 'Control Activities' | The policies and procedures that help ensure that necessary actions are taken to address risks to achievement of the entity's objectives. |
| Define 'Control Environment' | The tone of an organization, influencing the control consciousness of its people. It includes the following factors: integrity and ethical values, commitment to competence, board of directors or audit committee participation, management's philosophy and operating style, organizational structure, assignment of authority and responsibility, and human resource policies and practices. |
| Test of Controls specifically geared toward ' Test of Details' look at the Design and Operating Effectiveness of an Internal Control - what are tests directed at design effectiveness focused on? | Tests directed toward design effectiveness are concerned with whether the control is suitably designed to prevent or detect material misstatements in specific financial statement assertions. |
| Test of Controls specifically geared toward ' Test of Details' look at the Design and Operating Effectiveness of an Internal Control - what are tests directed at operating effectiveness focused on? | Tests directed toward operating effectiveness are concerned with how the internal control was applied, the consistency with which it was applied, and by whom it was applied. |
| Communicating Identified Control Deficiencies—How must the auditor communicate the significant deficiencies and material weaknesses identified in the audit ? | In writing |
| When must the auditor communicate significant deficiencies and material weaknesses identified in the audit? | AICPA -
By the 'Report Release Date' and should be made no later than 60 days following the report release date.
*The PCAOB requires such matters be communicated prior to the release of the auditor's report.*
*matters communicated ORAL are those of lesser significance* |
| Other Matters— What are ways that an auditor may choose to communicate other matters believed to be beneficial to the entity (including deficiencies that are not “significant deficiencies”) | Orally or Verbally
*If communicated verbally, the auditor must document such communication.* |
| As a tool to analyze the audit considerations of internal control policies and procedures in each transaction cycle, remember that internal controls (specifically, “control activities”) should “SCARE”!
What does this acronym stand for? | 1. Segregation of duties
2. Control (physical)
3. Authorization (management)
4. Review (reconciliation)
5. EDP (IT) |
