Internal Control Audit and Compliance - Documentation and Testing Under the New Coso Framework

"Ease the transition to the new COSO framework with practical strategyInternal Control Audit and Compliance provides complete guidance toward the latest framework established by the Committee of Sponsoring Organizations (COSO). With clear explanations and expert advice on implementation, this helpful guide shows auditors and accounting managers how to document and test internal controls over financial reporting with detailed sections covering each element of the framework. Each section highlights the latest changes and new points of emphasis, with explicit definitions of internal controls and how they should be assessed and tested. Coverage includes easing the transition from older guidelines, with step-by-step instructions for implementing the new changes. The new framework identifies seventeen new principles, each of which are explained in detail to help readers understand the new and emerging best practices for efficiency and effectiveness.The revised COSO framework includes financial and non-financial reporting, as well as both internal and external reporting objectives. It is essential for auditors and controllers to understand the new framework and how to document and test under the new guidance. This book clarifies complex codification and provides an effective strategy for a more rapid transition. Understand the new COSO internal controls framework Document and test internal controls to strengthen business processes Learn how requirements differ for public and non-public companies Incorporateimproved risk management into the new framework The new framework is COSO's first complete revision since the release of the initial framework in 1992. Companies have become accustomed to the old guidelines, and the necessary procedures have become routine - making the transition to align with the new framework akin to steering an ocean liner. Internal Control Audit and Compliance helps ease that transition, with clear explanation and practical implementation guidance"--...

List of contents

Preface xi
 
Acknowledgments xv
 
Chapter 1: What We All Share 1
 
Need for Control Criteria 1
 
Overview of the COSO Internal Control Integrated Framework 2
 
Holistic, Integrated View 3
 
Revised COSO Internal Controls Framework 6
 
What We Must Do 8
 
Basic Scoping and Strategies for Maintenance 11
 
Where We Depart 12
 
Triangle of Efficiency 13
 
Controls versus Processes 14
 
The Debate Continues 18
 
Organization of This Book 18
 
Appendix 1A: COSO 17 Principles 20
 
Chapter 2: Setting the Scope of Your Documentation Project: Identifying the Core 21
 
Start with Business Objectives 21
 
After the Initial Year 24
 
Mapping the Entity to the Financial Statements: Ins and Outs 25
 
Consider Risks, Not Just Quantitative Measures 27
 
Inherent and Control Risk 28
 
Overstatement and Understatement 28
 
Does "In Scope" Imply Extensive Testing? 37
 
A Consolation 39
 
Be Careful Out There! 40
 
Appendix 2A: Summary of Scoping Inquiries 42
 
Chapter 3: The Risk Assessment Component 45
 
Risk Assessment Principles in COSO 46
 
Cost Control 46
 
Basics 47
 
Likelihood, Magnitude, Velocity, and Persistence 48
 
Separate Assessments of Inherent and Control Risks 50
 
Role of Assertions 51
 
Assertions 52
 
Principles 6 and 7: Specify Suitable Objectives; Identify and Analyze Risk 56
 
Identifying Risks 59
 
External Sources of Risk Information 60
 
Internal and External Reporting Risks 61
 
Compliance Risks 61
 
Disclosed Material Weaknesses in Risk Assessment 62
 
Principle 8: Assess Fraud Risk 62
 
Auditor Responsibility to Detect Fraud 65
 
Antifraud Controls for Management to Consider 66
 
Ties to Other Principles and Components 66
 
Principle 9: Identify and Assess Significant Change 66
 
Gathering Information to Support the Risk Assessment and Consider Change 68
 
Appendix 3A: SAS No. 99 Exhibit: Management Antifraud Programs and Controls 72
 
Attachment 1: AICPA "CPA's Handbook of Fraud and Commercial Crime Prevention" Code of Conduct 87
 
Attachment 2: Financial Executives International Code of Ethics Statement 91
 
Appendix 3B: Understanding Fraud Risk Assessment 93
 
Chapter 4: Control Environment 99
 
Principle 1: Commitment to Integrity and Ethical Values 100
 
Principle 2: Board of Directors (Governance) Demonstrates Independence from Management and Exercises Oversight of the Development and Performance of Internal Control 104
 
Principle 3: Management Establishes, with Board Oversight, Structures, Reporting Lines, and Appropriate Authorities and Responsibilities in the Pursuit of Objectives 109
 
Principle 4: Commitment to Attract, Develop, and Retain Competent Individuals in Alignment with Objectives 110
 
Principle 5: The Organization Holds Individuals Accountable for Their Internal Control Responsibilities in the Pursuit of Objectives 113
 
Appendix 4A: Understanding and Awareness of Control Responsibilities 117
 
Chapter 5: Control Activities 120
 
Principle 10: Selects and Develops Control Activities to Mitigate Risk and Achieve Objectives 120
 
Principle 11: Selects and Develops General Controls over Technology 132
 
Principle 12: Deploys through Policies and Procedures 141
 
Summing Up 143
 
Appendix 5A: Linking Common Control Activities and Assertions 146
 
Appendix 5B: Linkage of Principles to Controls, Policies, and Procedures 1

About the author

LYNFORD GRAHAM, CPA, has more than 30 years of public accounting experience in audit practice and in various national firm policy development groups. He is a visiting professor of accountancy and executive-in-residence at Bentley University, Waltham, MA. He currently maintains an active consultancy practice in statistical audit sampling, litigation support, and audit methodologies, and develops numerous training seminars for conferences and firms.

Summary

Ease the transition to the new COSO framework with practical strategy Internal Control Audit and Compliance provides complete guidance toward the latest framework established by the Committee of Sponsoring Organizations (COSO).

Product details

• Authors: L Graham, Lynford Graham, Graham Lynford
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 20.03.2015
• EAN: 9781118996218
• ISBN: 978-1-118-99621-8
• No. of pages: 416
• Series: Wiley Corporate F&A; Wiley Corporate F&A
• Subjects: Social sciences, law, business > Business > Business administration; Rechnungswesen, Revision, Accounting, Compliance, Auditing, COSO, Revision (Wirtsch.)