BUS 426 Lecture Notes - Lecture 4: Audit Risk, Financial Statement, Regional Policy Of The European Union

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 426
• Professor: Michael Favere- Marchesi

Document Summary

Internal controls, are policies and procedures designed to provide reasonable assurance for management to achieve goals and objectives. Management"s objective to internal controls: maintain reliable control system, safeguard assets, optimize the use of resources, prevent or detect errors/frauds. Auditor"s objective to internal controls: plan the audit process which includes evaluating internal controls and assess control risk, consider only internal controls over financial reporting. Establish + maintain proper system of internal controls. + dependability of individuals that execute the controls: internal controls can be overridden by collusion. Control environment: risk assessment, control activities, information + communications, monitoring. If you have these, then it is a control system. Risk assessment: able to identify risks, evaluate significance of risks, assess likelihood of occurrence, action plan to reduce that risk to an acceptable level. Control activities: policies and procedures to address risks of failing to achieve the objectives, 5 control groups, adequate segregation of duties.