Ch.6
* Committee of Sponsoring Organizations of the Treadway Commission (COSO Framework)
1. deem Environment- Tone at the Top, how does management approve of internal chastenesss
i. talk & amp; Enforcement of Integrity and Ethical Values
ii. Commitment to Competence
a) Hire upright person and number of people
b) Whole department is filled
iii. Active panel of Directors
iv. Management Philosophy and Operating Style
v. Organization Structure
a) Assignment of liberty and Responsibility
2. Entitys Risk Assessment Process- how does management do this?
i. concentre on how change is handled (Ex. new employee, acquisition)
3. Info. Systems (I.T. Hardware and Software) & related Business Processes (Manual or Automated) Relevant to Financial Reporting & Communications
i. Revenue, Production, Expenditure, HR, Industry Specific, G/L Financial
4. concur Activities- policies and procedures that help to fasten that managements directions are carried out
i. Automated or Manual
ii. achievement Review: Current course of study vs. Prior Year, Current Year vs. Budget
iii.
Information Processing check up ons
a) General Controls- Applicable to all systems (change control and security access)
b) Application Controls- specific to system
iv. Physical Controls- Access to Area, clip Clock
v. Segregation of Duties
5. Monitoring Controls
* All Internal Control Systems deprivation to be Documented through:
* Narratives
* Flowcharts
* Internal Control Questionnaires
Control Reliance Strategy vs. Substantive Strategy Table:
Control Reliance Strategy| Substantive Strategy|
Rely on Controls| Do not rely on controls|
Test Controls to own sure operating appropriately| Use substantive procedures as main testing source|
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