term1 Definition1term2 Definition2term3 Definition3
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A failure to get a management report is a....
Scope limitation
Management must comply with these four things in order for an auditor to an complete an audit of ICFR...
1. Accept responsibility
2. Evaluate effectiveness
3. Support their eval
4. Present a written assessment of the effectiveness of ICFR at the year end
Control deficiency exists when....
The design or operational of the control prevents it from preventing a material misstatement.
Material vs significant weakness...
A significant weakness still merits attention from those responsible, but a material weakness suggests that there's a reasonable possibility of a material misstatement
Design deficiency
1. It's poorly designed
2. Even if it operates correctly, it wouldn't work
3. Or, it's missing
Operational deficiency
The design is fine, but it never works.
1. It does not operate appropriately
2. The person operating does not have the appropriate skills/qualifications
An auditor must communicate in writing to management and the audit committee any....
significant and material weaknesses.
Four steps to planning the audit of ICFR
1. Which are important?
2. How often do they function?
3. Do I rely on the work of others?
4. Determine materiality
Identifying significant accounts (1-4)
1. Size/composition
2. Susceptibility to misstatement due to errors or fraud
3. Volume of activity due to complexity, homogeneity of the transactions
4. Nature of the account or disclosure
5. Accounting and reporting complexities
6. Exposure to losses in the account
7. Possibility of significant contingent liabilities arising from the activities reflected in the account
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