The internal control framework developed by COSO includes five so-called 'components' of internal control. What are these components? What do they mean to auditors?© BrainMass Inc. brainmass.com October 17, 2018, 1:55 am ad1c9bdddf
Before you proceed to answer this question, the first thing that you may want to do is note the definition of internal control. The internal controls of a firm are a system consisting of specific policies and procedures designed to provide management with reasonable assurance that the goals and objectives it believes important to the entity will be met. Also, according to the COSO it may defined as "a process effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories - effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations."
In other ...
This solution provides a definition of what is internal control; in addition, it provides information about the five components of internal control and what they really mean to auditors. References are also provided in the solution.
9-23 (Detection risk and audit evidence) risk components matrix
9-23 (Detection risk and audit evidence) Shown below are five situations in which the auditor wishes to determine planned acceptable levels of detection risk and the planned levels of evidence needed for specific financial statement assertions. The auditor has used judgment in arriving at the nonquantitative expressions for various risk factors.
A B C D E
Desired audit risk Very low Very low Very low Very low Very low
Assessed inherent risk Maximum High Moderate Low Maximum
Planned assessed level of control risk Low High High Moderate High
Planned assessed level of analytical procedures Moderate Moderate Low Low High
Planned assessed level
of tests of details risk
a. Using the risk components matrix in Figure 9-4, determine the acceptable level of tests of details risk for each situation.
b. Rank the five situations from the most evidence required from substantive tests (1) to the least evidence required from substantive tests (5). You may have ties.
c. Explain your ranking of situation D.View Full Posting Details