Preview

Audit assignment

Satisfactory Essays
Open Document
Open Document
440 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Audit assignment
Weaknesses in an Internal Audit Control System by Osmond Vitez, Demand Media
An internal audit control system is a common safeguard found in business today. This safeguard is broken down into two parts: internal audits and internal controls. Internal audits are informal reviews by the business owner or employees. They provide information on internal operations in employee performance. Internal controls represent the specific policies the business owner, manager and employees must follow in the business. Internal audit control systems have a few weaknesses that business owners must address.

Broad Application
Internal audit control systems can be very broad in their application and this can create a weaker internal audit control system. Business owners should attempt to develop a system that focuses on specific business issues. Control systems that cover too many business departments or functions may not produce the maximum benefit for companies. Control systems should contain a few well-defined policies for each department. This also allows operational managers and employees to help the business owner maintain the focus on proper application of the control system policies.

Time Consuming
Creating internal safeguards is often a time consuming process. Business owners may also face the disadvantage of learning about control systems while working in the business. Internal audit control systems can also be time consuming for owners and managers to maintain. Time-consuming safeguards may cause managers and employees to find ways of getting around the control system. This weakness can create difficult management situations for owners attempting to maintain proper business practices. Business owners may also be unable to dedicate the time needed to review extensive internal audit control systems.

Lack of Knowledge
Business owners may be unaware of the best internal control audit systems to implement in the company. This lack of knowledge makes it difficult
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Apollo Shoes Engagement Letter
    • 483 Words
    • 2 Pages

    Apollo Shoes Engagement Letter

    Understanding internal controls is necessary to plan and complete the audit. The audit is not designed to obtain any type of reasonable assurance about these controls. If any significant deficiencies within the internal control system are discovered during the audit we will express concern to management, and the audit team will be made aware our findings.…

    • 483 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Wk 5 Chapter 11 & 13 Learning Check
    • 627 Words
    • 3 Pages

    Wk 5 Chapter 11 & 13 Learning Check

    Before any strategy takes place, an auditor must determine the end result desired from the Information Technology being used as well as the type of technology being dealt with. The most important thing is security thus it is vital to know this technology in and out to be able to determine its strengths and weaknesses. This allows for proper compensation to combat such attacks whether they are fraudulent or accidental in nature. It is necessary to be familiar with different types of proven viable internal control setups to properly test and gage an IT’s internal control system. There are three different strategies use when testing internal controls. First includes assessing the controls using user control information. In this strategy, an auditor would gather computer-generated reports and compare those to all documentation on specific transactions. This process is also known as auditing around the computer because it deals with more hard copy documents. The next strategy entails using application controls to determine the level of risk…

    • 627 Words
    • 3 Pages
    Good Essays
    Read More
  • Better Essays

    Xacc/280 Week 8 Assignment Internal Controls Essay Example
    • 1015 Words
    • 4 Pages

    Xacc/280 Week 8 Assignment Internal Controls Essay Example

    Companies will often use internal controls in the accounting department in order to avoid abuse and inaccurate data recording as well as protecting companies from fraud. Internal controls will also be used by companies as a means to avoid theft of assets, and unauthorized use. The acquisition and disposal of assets is also a very important part of internal controls. These policies and procedures will help companies in the prevention or detection of any unauthorized acquisition, use or the disposition of its assets, as these types of activities could have a negative impact on the company’s financial statements. But in order for the internal controls to work, management has to ensure the proper protocols are being followed.…

    • 1015 Words
    • 4 Pages
    Better Essays
    Read More
  • Good Essays

    Acct 504 Case Study 2
    • 1426 Words
    • 5 Pages

    Acct 504 Case Study 2

    Thank you for selecting our firm to provide your company with an evaluation of your organizations internal control system. Internal control systems are vital in securing your organizations assets, it will limit the risk of fraud as well as misuse of your assets. Comprehending how to separate duties among your employees will aid in improving transparency as well as keep your company financially strong.…

    • 1426 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Uop Xacc Week 8 Internal Controls
    • 1219 Words
    • 5 Pages

    Uop Xacc Week 8 Internal Controls

    Since these assets are a businesses’ or corporations’ most valuable resources, they must be protected from theft and unauthorized use by creating, and implementing, a company “internal controls system.” Internal controls are procedures and protocols by which a company conducts internal monitoring. Through self-monitoring, a company increases the chance of success. Also, these controls systems ensure the liable parties invested in companies that their business are running efficient. Internal controls form an integral part of any business. In laymen’s terms, it is a system of internal controls which minimize errors in the accounting records, and deter fraud and embezzlement. Because these internal controls protect against many illegal happenings in businesses, they are rightfully required by law.…

    • 1219 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Better Essays

    Xacc 280 Internal Control Research Paper
    • 1193 Words
    • 5 Pages

    Xacc 280 Internal Control Research Paper

    This paper will discuss the internal controls and how they work in business. I will shed some light on the organizations financial and business policies, process and procedures. The purpose of these internal controls is to protect the company’s resources against fraud, misappropriate funds and most important waste. A company can spend quite a bit of money that does not make the company any profit. This paper will examine all aspects if internal controls and their functions.…

    • 1193 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    Acc 544 Checklist For Evaluating Internal Control
    • 1165 Words
    • 5 Pages

    Acc 544 Checklist For Evaluating Internal Control

    The control environment is the overall attitude, awareness, and actions of management regarding the internal control system and its importance to the business. Risk assessment and analysis promote awareness of issues by identifying internal and external risk factors and increase the achievement of company objectives. Control activities include both preventative controls used to avoid potential problems and detective controls, used to detect errors, fraud, and irregularities. Communicating the information from internal and external sources in a reliable, relevant, and timely manner is vital to the operation and control of a company. Monitoring is the last component and entails reviewing and assessing the internal control procedures to evaluate the design, execution, and effectiveness (UCOP,…

    • 1165 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    Miniscribe
    • 936 Words
    • 4 Pages

    Miniscribe

    Internal accounting control is crucial to internal control in a company. Accounting control is the methods and procedures for authorizing transactions, safeguarding assets and ensuring the accuracy of the financial records.…

    • 936 Words
    • 4 Pages
    Better Essays
    Read More
  • Good Essays

    Xacc 280 Internal Controls
    • 799 Words
    • 4 Pages

    Xacc 280 Internal Controls

    Internal controls are an essential asset to any company that wishes to maintain their company’s security and accuracy. These controls help to protect the assets belonging to a company from unforeseen events such as employee theft, robbery, or any sort of unauthorized use (Weygandt, Kimmel, & Kieso, 2008). They also create the opportunity for accounting records to be more accurate and reliable by limiting the possibility for errors and irregularities (Weygandt, Kimmel, & Kieso, 2008). An independent internal verification that is provided via internal controls maximizes the benefits of this system (Weygandt, Kimmel, & Kieso, 2008). There should be physical, mechanical, and electronic controls so that when jobs are segregated, there are more than one opportunities for a final verification of accuracy (Weygandt, Kimmel, & Kieso, 2008).…

    • 799 Words
    • 4 Pages
    Good Essays
    Read More
  • Good Essays

    Sarbanes-Oxley Act Analysis
    • 406 Words
    • 2 Pages

    Sarbanes-Oxley Act Analysis

    Having strong internal control thrusts a company beyond its present-day limits, thus facilitating the implementation of the best practices and providing necessary resources that aid in making them unique. Srinivasan (2014) stated, “Markets have been able to use the information to assess companies more effectively, managers have improved internal processes, and the internal control testing has become more cost-effective over time” (para. 9).…

    • 406 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Acc 542 Internal Control And Risk Evaluation Paper
    • 912 Words
    • 4 Pages

    Acc 542 Internal Control And Risk Evaluation Paper

    In today’s society, internal controls are applied to support an organization 's managers to become more successfully to release the responsibilities by applying and understanding internal control concepts. Internal controls are most frequently saw as "a lot of red tape"; however, internal controls have different circumstances when confirming high moral and ethical values which should be communicated in an organization. Internal controls are essentially composed of five interrelated components which are communication and information, monitoring, control environment,…

    • 912 Words
    • 4 Pages
    Good Essays
    Read More
  • Good Essays

    Evaluating Internal Controls
    • 738 Words
    • 3 Pages

    Evaluating Internal Controls

    An organization’s internal controls are comprised of five components, which include: the control environment, risk assessment, control activities, monitoring, and information and communication. The five components of internal control are considered to be criteria for evaluating an organization’s financial reporting controls and the bases for auditors’ assessment of control risk as it relates to an organization’s financial statements (Lowers, et. al., 2007). “Thus, auditors must consider the five components in terms of (1) understanding a client’s financial reporting controls and documenting that understanding, (2) preliminarily assessing the control risk, and (3) testing the controls, reassessing control risk, and using that assessment to plan the remainder of the audit work” (Lowers, et.al., 2007, p. 161).…

    • 738 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Ch07 PrinciplesOfAuditing Ed3
    • 18348 Words
    • 51 Pages

    Ch07 PrinciplesOfAuditing Ed3

    INTERNAL CONTROL AND CONTROL RISK 7.1 Learning Objectives After studying this chapter, you should be able to Understand the basic definition of internal control. Discuss why internal controls are important to the auditor. Characterize the differences between general and application IT controls and how to reduce IT risk. Distinguish between the different components of internal control. Describe the elements of the control environment. Evaluate how managements objectives are related to risk assessment. Explain the effects of information and communication on the internal control system. Distinguish between the major types of control activities. Give examples of major types of control procedures (activities). Identify monitoring controls. Distinguish between hard and soft controls and understand their control objectives. Know what is meant by design of controls. Follow what an auditor does in preliminary planning assessments of internal control risk. 7.2 Introduction Internal control is not only essential to maintaining the accounting and financial records of an organization, it is essential to managing the entity. Everyone from the external auditors to management to the board of directors to the stockholders of large public companies to government, have an interest in internal controls. In many parts of the world, regulators have emphasized the importance of internal control by requiring management to make annual public statements about the effectiveness of internal controls. Reinforcing internal controls is generally seen as one of the most important steps in avoiding negative surprises. Even a company that is considered in control will face risks. Effective internal controls will ensure that risks are identified at an early stage. Company risk management procedures will identify ways to deal with these risks, to the extent possible. As we discussed in Chapter 6 Main Audit Concepts and Planning the Audit (ISA 300, 315, 320), the consideration of internal control is…

    • 18348 Words
    • 51 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Internal Control Essay Example
    • 2340 Words
    • 10 Pages

    Internal Control Essay Example

    In accounting and auditing,internal control is defined as a process effected by an organization's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives.[1] It is a means by which an organization's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks). At the organizational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations. At the specific transaction level, internal control refers to the actions taken to achieve a specific objective (e.g., how to ensure the organization's payments to third parties are for valid services rendered.) Internal control procedures reduce process variation, leading to more predictable outcomes. Internal control is a key element of the Foreign Corrupt Practices Act (FCPA) of 1977 and the Sarbanes–Oxley Act of 2002, which required improvements in internal control in United States public corporations. Internal controls within business entities are also referred to as operational controls.…

    • 2340 Words
    • 10 Pages
    Powerful Essays
    Read More
  • Good Essays

    Internal Control System
    • 430 Words
    • 2 Pages

    Internal Control System

    A system of internal control refers to the process by which organizations maintain environments that encourage incorruptibility and deter fraudulent activities by management and employees. An organization’s components of internal control are evaluated during the planning phase of an independent financial statement audit. The results of the evaluation directly influence the auditor’s level of detailed testing. To reduce detailed testing, and perhaps the audit fee, organizations implement common features of a proper internal control system.…

    • 430 Words
    • 2 Pages
    Good Essays
    Read More

Related Topics