Summary
Summary substantive procedures
- Course
- Institution
substantive procedures
[Show more]
Seller
Follow
nhlapobf
Content preview
TEST OF CONTROLSWHAT IS INTERNAL CONTROL
- The process designed, implemented and maintained
- By those charged with governance, management and other personnel
- To provide reasonable assurance about the achievement of an entity’s objectives with
regard to:
o Reliability of financial reporting;
o Effectiveness and efficiency of operations; and
o Compliance with applicable laws and regulations.
COMPONENTS OF INTERNAL CONTROL
Internal control, according to ISA 315, par 14 to 24, consists of the following components:
- The control environment;
- The entity’s risk assessment process;
- The information system, including the related business processes relevant to financial
reporting and communication;
- Control activities relevant to the audit; and
- Monitoring of controls.
LIMITATIONS TO INTERNAL CONTROL
- Cost vs. benefit. Management generally require the cost of internal control not to exceed
the benefit derived from it;
- Internal controls are generally directed at routine transactions as opposed to non-routine
transactions;
- There is always the potential of human error;
- There is always the possibility of circumvention of internal controls through collusion
between individuals;
- There is a possibility that persons responsible for internal controls might abuse their power;
- Internal controls might become inadequate due to changes in conditions at the entity.
TEST OF CONTROLS
In terms of ISA 330 par 4, a test of control is “an audit procedure designed to evaluate the operating
effectiveness of controls in preventing, or detecting and correcting, material misstatements at the
assertion level”.
ISA 315 stipulates that the auditor, as part of his risk assessment, shall obtain an understanding of
the client’s internal control. When the auditor obtains an understanding of internal control, he has
to (ISA 315, par 13) do the following:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller nhlapobf. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.78. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53068 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now