CDE4
INTERNAL CONTROL: CRITICAL CONCEPTS RELATED TO FINANCIAL STATEMENT AUDITS

Significant changes in the auditing industry have highlighted the necessity for all entities, regardless of nature, size, and complexity, to have a well-designed and effectively operating system of internal controls over reliable financial reporting. Many entities and auditors continue 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 the ones that matter most. This course will provide practical guidance on exactly what a sound system of internal controls "looks like" and the resulting impact on the financial statement audit, particularly for smaller entities. In addition, well explore the new COSO exposure draft and examine the differences between the 1992 version of the framework and the exposure draft.

Major Topics:

• Differences between the 1992 version of the framework and the recently issued exposure draft
• Key components of internal control per the COSO Integrated Framework, and the important role each plays in the design and operating effectiveness of internal control over reliable financial reporting
• Evaluating design and implementation of an entitys design on internal controls, including the potential impact on assessed risk of material misstatement
• Important cost-benefit considerations when deciding whether to test controls for operating effectiveness as a control reliance strategy in a financial statement audit
• Special considerations related to the use of outside service organizations
• Evaluating and communicating identified deficiencies in internal controls

Learning Objectices:

• Describe important internal control concepts, including identifying "key controls" in a "top-down" approach to evaluating the design and implementation of internal control over reliable financial reporting
• Discuss the difference between evaluating "design and implementation" and "operating effectiveness" when designing the nature, timing and extent of financial statement audit procedures
• Explain the difference between a "material weakness" and a "significant deficiency," and the potential impact on the assessed risk of material misstatement when designing the detailed audit plan

Designed For: Accountants, both in public and private practice, responsible for designing, evaluating, and/or monitoring internal controls over financial reporting when a financial statement audit is involved
Level of Knowledge: Intermediate
Prerequisite: Experience with designing, evaluating or monitoring internal controls
Advanced Preparation: None
CFP: No
Yellow Book: No
New: Yes
Credits: 4
Field of Study: Auditing