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Risk Assessment: Internal Control Evaluation from an Auditors Point of View - Term Paper Example

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Risk Assessment: Internal Control Evaluation from an Auditors Point of View

A proper internal control system entails the execution of efficient and effective control activities at different areas of an organization. The internal control system should be set up by the management parallel with the strategies and objectives established by the board of directors or management, and should incorporate all workers in the organization. The activities should be evaluated and documented on a continuous basis as an included component of daily activities (Van, 1999). This paper will look at an evaluation of Internal Controls from an Auditors point of view. Auditing the internal controls is a properly thought out evaluation performed to guarantee that audit risk, for example, control risk, inherent risk, and detection risk, are practically in the satisfactory scale. In addition, audit risk refers to the prospect of an inaccurate view is provided by the auditor, for example, an auditor providing an incompetent view when a competent view should be provided. A proper internal control system requires an adequate separation of work and concise outline of responsibilities, both between functions and at a personal level. In each audit, an auditor should acquire at least a minimal understanding of the customer’s internal controls that have an impact on every financial process and business (Committee of Sponsoring Organizations, 1992). This does not mean that the auditor can carry out a complete audit of internal controls. Internal control refers to the process intended to guarantee efficient and effective operations, adequate financial reporting, and conformity with valid rules and regulations. In addition, internal control protects property against unauthorized use and theft, disposal, or acquisition. Also, internal control can be described as a process influenced by a company’s duty and authority flows, structure, management information systems and people, established to assist the organization realize objectives or goals. It is a channel, through which the company’s resources are managed, supervised, and assessed. An auditor should evaluate the internal controls of an organization so as to detect and prevent fraudulent activities and safeguard the resources of the organization, both intangible, for example, trademarks, and tangible, for example, property and machinery (Committee of Sponsoring Organizations, 1992). An auditor assesses the internal control objectives which are associated with observance of rules and regulations, apt response on the success of strategic and operational goals, and consistency of financial coverage. An auditor should also evaluate the steps adopted to accomplish objectives, for example, rendering of payment to third parties by an organization. This will lessen process variation, leading to more obvious results. The control environment r ...Show more

Summary

Risk Assessment: Internal Control Evaluation Name: Institution:       Risk Assessment: Internal Control Evaluation Control Systems and Risk Management intend to guarantee that the dangers of an organization are recognized and controlled and that the deliberate goals are attained while observing with valid regulations and laws at a sensible phase of assurance…
Author : katherinereilly
Risk Assessment: Internal Control Evaluation from an Auditors Point of View essay example
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