Safeguarding of Assets - Essay

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330 : Safeguarding of Assets.
340 : Economical and Efficient Use of Resources.
350 : Accomplishment of Established Objectives and Goals for Operations or Programs

330 Safeguarding of Assets -- Internal auditors should review the means of safeguarding assets and, as appropriate, verify the existence of such assets

Safeguarding of assets is those policies and procedures that "provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements." This definition is consistent with the definition provided in the Committee of Sponsoring Organizations (COSO), Reporting to External Parties, which provides the following definition of internal control over safeguarding of assets: Internal control over safeguarding of assets against unauthorized acquisition, use or disposition is a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity's assets that could have a material effect on the financial statements. Such internal control can be judged effective if the board of directors and management have reasonable assurance that unauthorized acquisition, use or disposition of the entity's assets that could have a material effect on the financial statements is being prevented or detected on a timely basis.

For example,
a company has safeguarding controls over inventory tags (preventive controls) and also performs periodic physical inventory counts (detective control) timely in relation to its quarterly and annual financial reporting dates.

Although the physical inventory count does not safeguard the inventory from theft or loss, it prevents a material misstatement to the financial statements if performed effectively and timely. Therefore, given that the...
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