There is often a misconception amongst auditors that if the auditor does not propose to rely on internal controls there is no need to obtain an understanding of controls, or to document specific elements of internal controls.
This is however not true as auditing standards require that there must be some review of the internal controls on every audit, (even when the auditor performs a small audit). In order to demonstrate compliance with auditing standards the auditor needs a basic understanding of the company and its method of operation to prepare an effective substantive, detailed audit plan.
The purpose of this course is to take delegates through the audit process and to discuss in detail every requirement that is listed in the auditing standards that relates to internal controls.
This course offers a comprehensive review of the auditors obligation toward internal controls, from the requirements listed in the international standards on auditing through to the real-world issues faced during external audits.
Furthermore this course will cover the documentation requirements relating to an audit engagement, including the elements to be included in the working papers.
After this course, delegates should understand that auditors always have a responsibility towards internal control, whether or not tests of controls will be performed.
They should however understand exactly what is included in this responsibility, and that it does not include implementing or documenting system descriptions, but that this is managements responsibility.
Delegates should understand when a control is relevant to the audit and exactly what needs to be done for this control and how it should be documented.
If reliance will be placed on controls, delegates should understand how to design tests of controls and how to determine sample sizes for these tests.
Lastly, delegates should understand their reporting duties, both to those charged with governance and to the users of the financial statements in terms of the revised reporting standards.
What is internal control and why do we implement it Responsibility for internal controls
What is the auditors responsibility towards internal controls?
The auditor shall obtain an understanding of internal controls relevant to the audit.
The auditor shall include in the audit documentation key elements of the understanding obtained regarding each of the internal control components
What effect will this assessments of the key elements have on the determination of the risk of Material misstatement (ROMM) The auditor shall evaluate the design of those controls and determine whether they have been implemented.
Is this the same as a walk-through test?
The auditor shall design and perform tests of controls to obtain sufficient appropriate audit evidence as to the operating effectiveness of relevant controls.
Substantive procedures alone cannot provide sufficient appropriate audit evidence at the assertion level.
Sampling techniques
Which one is better?
The auditors obligation to report deficiencies in controls to management and those charged with governance.
How will deficiencies impact on the auditors report in terms of the new reporting standards?
What is a KAM and when will this be reported.
