Term
| 3 responsibilities of mgmt concerning internal ctrls |
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Definition
| 1. SOX 2. certify FS 3. report on IC |
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Term
| 3 things included on company's annual report concerning IC |
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Definition
| 1. statement that mgmt is responsible for establishing and maintaining IC over finc reporting 2. statement IDing the framework used to evaluate the effectiveness of IC (COSO) 3. statment providing mgmt's assessment of effectives of IC |
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Term
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Definition
| 1. control environment 2. info & comm 3. monitoring 4. ctrl procedures 5. risk assessment |
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Term
| control environment (component of IC) |
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Definition
| tone at the top. mgmt's behavior and attitude: ethical behavior, audit committee, good people hired (ELC) |
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Term
| info & comm (component of IC) |
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Definition
| reliable and relevant info communicate4d timely, classified correctly, and valued correctly |
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Term
| monitoring (component of IC) |
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Definition
| performance reviews. employees doing their jobs? repercussions if not (ELC) |
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Term
| ctrl procedures (component of IC) |
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Definition
| small and specific ctrl procedures. authorized/approved/verified/reconciled transactions. physical and computer controls. |
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Term
| risk assessment (component of IC) |
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Definition
| company IDing threats to success? not the most important component. |
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Term
| 3 general phases of IC eval |
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Definition
| 1. understand and document client's IC (questionnaire, narrative, flowcharts) 2. assess ctrl risk (how do we think ctrls are operating) 3. testing and reassessment |
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Term
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Definition
| audit of IC over Finc reporting (anything else?) |
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Term
| 6 specific phases of IC audit |
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Definition
| 1. plan the engagement 2. use a top down approach to gain understanding (ELC to specifics) 3. test IC design and operating effectiveness 4. eval ctrl deficiencies 5. wrap up: form an opinion 6. report on IC |
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Term
| 3 levels of ctrl breakdown |
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Definition
| 1. material weakness 2. significant deficiencies 3. control deficiencies |
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Term
| material weakness (IC breakdown) |
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Definition
| reasonable possibility that a material misstatement could be in FS |
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Term
| significant deficiencies (IC breakdown) |
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Definition
| not material issues, but could impact FS |
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Term
| control deficiencies (IC breakdown) |
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Definition
| not too bad ctrl issues. inform mgmt so it doesnt get bigger |
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