Technological advances, increased regulatory scrutiny, globalization, and other challenges have caused entities and auditors to struggle with proper consideration of the cost-benefit of internal controls, recognizing that a well-designed system does not have to prevent or detect all internal control deficiencies – just ones that matter most to the entity’s objectives. This course provides practical guidance on what a sound system of internal controls “looks like” and its impact on the financial statement audit, particularly for smaller entities.

Major Topics:

  • Differences between the 1992 version of the framework and the 2013 COSO guidance
  • The evolution of internal controls theory and practice, including emerging guidance specific to smaller entities
  • Key components of internal control per the COSO Integrated Framework, and the role each plays in the design and operating effectiveness of internal control over reliable financial reporting
  • Comparing and contrasting specific types of internal controls
  • The critical role of information technology (IT) controls in reliable financial reporting, including both general and application controls
  • Gaining an understanding of an entity’s design of internal controls
  • Evaluating design/implementation of an entity’s design on internal controls (& impact on assessment of risk of material misstatement)
  • Testing controls for operating effectiveness and determining the appropriateness of the nature, timing, and extent of control testing
  • Evaluating the results of tests of controls, including the impact on the nature, timing and extent of substantive audit procedures
  • Considerations related to the use of outside service organizations
  • Differentiating an external auditor’s responsibilities depending on the professional standards being followed
  • Evaluating/communicating deficiencies in internal controls

Learning Objectives:

  • Describe important internal control concepts, including identifying "key controls" in a "top-down" approach to evaluating the design & implementation of internal control over reliable financial reporting
  • Discuss the difference between evaluating "design and implementation" and "operating effectiveness"
  • Explain differences between "material weakness" and "significant deficiency" regarding internal control over reliable financial reporting

Designed For: Accountants responsible for designing, evaluating, and/or monitoring internal controls over financial reporting
Level of Knowledge: Intermediate
Prerequisite: Experience with designing, evaluating, or monitoring internal controls
Advanced Preparation: None
Credits: 8