InternalControlandControlRisk(英文版)(58页).ppt

Internal Controland Control Risk Chapter 10 COSO Report COSO Report- related to Treadway commission created to look at problems in fraudulent financial reporting. Internal control designed to provide reasonable assurance of meeting these objectives: reliability of financial reporting compliance with laws and regulations effectiveness and efficiency of operations Internal Control An on-going process ran by people that can only provide reasonable assurance of obtaining objectives. Breakdowns occur in internal controls as a result of: human error deliberate circumvention management override collusion Reasonable Assurance Means that the cost of the control should not outweigh its benefit. Auditors provide reasonable assurance that the financial statements are free from material misstatements. Components of Internal Control There are five components of internal control per COSO. Control Environment Control Risk Assessment Control Activities Monitoring Communication and Information Management is responsible for these components. Internal control is a management process. Control Environment Management’s philosophy and operating style Management and employee integrity and ethics Company organizational structure Commitment to competence - training Functioning BOD and audit committee Methods of assigning authority and responsibility Human resource policies and practices Risk Assessment Risk Assessment Management’s assessment of their control environment and identification of risks in financial reporting. Control Activities Control Activities Activities to mitigate control risks using the concept of reasonable assurance Performance reviews - actual to budget and follow-up action on variances. Information processing -Policies for transaction processing and error correction. Includes authorization, verifications and reconciliation. Physical controls to safeguard the assets Segregation of duties - prevent someone from stealing and concealing. Adequate Separationof D