What is the benefit of evaluating an internal control system in phases?
There are generally three phases when you evaluate internal controls. First, you gain an understanding of the client's business and what process and controls they claim to have in effect. This is done by interviewing, flowcharts, discussion with workers or managers, reviewing client documentation, and observing. A walk-through may also be done to be sure the auditor has a clear picture of the process and that the process is exactly what the manager or documentation says it is. The walk-through will be more likely in a higher risk area than in a lower risk area.
After you gain an understanding of the controls that are supposed to be in place, you decide the level of control risk. In this phase (second phase), you decide if the controls, as the client explained them and as you observed, results in a strong ...
Your tutorial is 502 words plus a link to a slide show and explains what the typically three phases of evaluating internal controls are and the benefit of having the three phases. An example of a control in each of the three phases is discussed.