Can a company receive an unqualified opinion on the audit of its external financial statements if it receives an adverse opinion on its internal control over financial reporting from its independent auditor? A company CAN receive an adverse opinion on the effectiveness of internal control and still receive an unqualified opinion on the financial statements […]
Control deficiency is a deficiency when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. Significant deficiency is a control deficiency or combination of control deficiencies that adversely affects the company’s ability to […]
Internal control over financial reporting is a process designed and maintained by management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). It encompasses the processes and procedures management has established to: a) Maintain records that accurately […]
A main role for the internal audit team is to evaluate the effectiveness of the internal control system and contribute to its ongoing effectiveness. With the internal audit team reporting directly to the audit committee of the board of directors and/or the most senior levels of management, it is often that this function plays a […]
An internal audit is a systematic review of an activity or department to accomplish one or more objectives stated in the internal audit policy. These objectives include: a) Determining the reliability and integrity of operating and financial information. b) Determining the degree of compliance with policies, procedures, law, and regulations. c) Assuring assets are properly safeguarded. d) Determining if […]
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
Internal controls should be proactive, value-added, and cost effective. In the best case scenario, poor internal controls result in increased bureaucracy, reduced productivity, increased complexity, increased time to process transactions, and increased non-value activities. In the worst case, poor internal controls interfere with the accomplishment of the unit’s goals and objectives and allow for misuse […]
An effective internal control structure will keep the right people informed about the organization’s progress (or lack of progress) in achieving its objectives, but it cannot turn a poor manager into a good one. Internal control cannot ensure success, or even survival. It can only provide reasonable assurance, due to limitations inherent in all internal […]
Reportable condition has the same meaning as the term significant deficiency. These two terms are used to define a significant deficiency in the design or operation of internal control that could adversely affect a company’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the company’s financial statements. […]
The internal control system must be monitored by management and others in the organization. This is the framework element that is associated with the internal audit function in the company, as well as other means of monitoring such as general management activities and supervisory activities. It is important that internal control deficiencies be reported upstream, […]
