Internal Controls: Testing and Communicating

Internal controls over financial reporting are used to prevent, detect, and correct misstatement. They also help to reduce the chance that fraud will occur. Auditors are tasked with determining when controls should be tested, designing the tests of controls, performing the tests, and documenting and communicating the results of the efforts. Although auditors are not required to search for deficiencies, they do have to consider whether there are areas where the potential for material weakness could occur. This course will discuss those areas and what mitigating factors could be considered in evaluating controls and the resulting communications that are required from the auditor.

Objectives

Participants will be able to:

• Realize the importance of the financial reporting system and financial reporting process
• Identify the impact of a control reliance strategy on audit procedures
• Design tests of internal controls
• Test and document the results of tests of internal controls
• Define the key terminology used when communicating deficiencies in internal control
• Identify and evaluate deficiencies in internal control
• Issue an AU-C 265 report

Credits