BUS 426 Chapter Notes - Chapter 9: Internal Control, Audit Risk, Financial Statement
Document Summary
Internal control: the policies and procedures instituted and maintained by the management of an entity in order to provide reasonable assurance that management"s objectives are met. Three objectives in designing an effective internal control. System: reliability of financial reporting, efficiency and effectiveness of operations, compliance with laws and regulations. Management"s objective in designing effective internal control: maintaining reliable control systems, safeguarding assets, optimizing the use of resources, preventing and detecting fraud and error. Testing the controls related to the reliability of the financial reporting. Testing the control over the classes of transactions: transaction-related audit objectives: six audit objectives that must be met before the auditor can conclude that the total for any given class of transactions is fairly stated. Sales transactions are included in the data files and summarized. Considering the whole picture of the client"s internal controls. 3 basic concepts of an internal control system. Management must establish and maintain the entity"s controls.