Internal Audit and Review Reports

To conduct the audit, the firm must acquire sufficient understanding of the internal control processes to help determine the nature and timing of the audit. However, the audit is not designed to identify deficiencies in internal control or provide assurance. The firm will make the audit committee aware of any significant deficiencies that come to Anderson, Olds, and Watershed’s attention during the audit.

the nature, timing, and extent of the procedures performed are consistent with the tailored audit program ; adequate in light of the results obtained; and documented in sufficient detail to provide a clear understanding of the purpose, sources, and conclusions reached (including reasons for these conclusions);

Internal audit- In-house assessment to ensure that all policies and external standards are followed, implemented, and operating effectively.

When testing of internal controls indicates that there may be significant deficiencies, then the auditor

Review the report of the independent registered public accounting firm on internal controls. Explain components of the report that meet the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the PCAOB.

When assessing an internal auditor’s competence, an auditor ordinarily obtains information about all of the following except

If an auditor is asked by a client to be involved in its evaluation of internal controls, the auditor should make sure that nothing is done to impair the appearance of objectivity and independence. The auditor may help in the gathering and preparation information as long as management directs the entire process, and is responsible for documenting controls. In order to ensure a consistent and comprehensive companywide process, auditors are recommending that their clients establish project teams that report directly to the CEO or CFO (McConnell, Banks, 2003).

When auditing a public company, the auditor must form an opinion on the effectiveness of internal control

Most of these laws are used within an organization as well to help aid in the accurate reporting of the financial reports and help them organize internal and audit controls within the organization to prevent potential fraud and misappropriation of funds. Sarbanes-Oxley Act 2002 mandates that all preparers, auditors, analysts, and users operate and know the importance of governance and internal controls. (Huefner, 2011) The Treadway Commission’s (COSO) The Committee of Sponsoring Organizations lists the objectives of internal controls and its importance. (Huefner, 2011) Internal Controls have to be monitored often. These are controls that change overtime based on the needs and the functionality of the organization. Random audits are one way to identify problems that may arise with internal controls. If this is not done often, it suggests that there could be a weakness in internal controls. Weakness in controls leads to fraud to occur within a company. If there is no monitoring of the internal controls than there is a risk of fraudulent behavior among employees and potential misappropriation of funds when reporting financial reports to the federal government. There is no validity to financial reports created and the auditor or professional accountant completing the financial reports

a) Providing a record of actual work performed, which provides assurance that the auditor accomplishes the planned objectives.

Microsoft. On July 31, 2008, the independent registered public accounting firm of Deloitte and Touche, LLP submitted their audit to the Board of Directors and Stockholder of Microsoft Corporation. The Committee of Sponsoring Organizations set forth the criteria in Internal Control – Integrated Framework which was adhered to by the auditor’s. The criteria specified that the audit should focus upon how the internal controls impacted the financial reporting of Microsoft. In addition, a Report of Management on Internal Control Over Financial Reporting was submitted with the audit. This report is used to assess how well the management of Microsoft controlled the financial reporting through internal control.

The role of internal audit is to provide independent declaration that an organization’s threatadministration, governance and internal control processes are functioning effectively. Internal auditors deal with concerns that are essentially important to the existence and success of any organization. Unlike external auditors, they aspect beyond financial possibilities and statements to reflect wider problems such as the organization’s reputation, development, its power on the location and the approach it treats its organizations.In summary, internal accountantssupport organizations to thrive.

Our audit will include obtaining an understanding of your internal controls sufficient to plan the audit and to determine the nature, timing, and extent of audit procedures to be performed. An audit is not designed to provide assurance on internal controls or to identify reportable conditions, that is, significant deficiencies or material weaknesses in the design or operation of internal control. Accordingly, we have no responsibility to identify and communicate significant deficiencies or material weaknesses in your internal controls as part of this engagement, and our engagement cannot be relied upon to disclose the same. However, during the audit, if we become aware of such reportable conditions, we will communicate them to you.

1) What additional work could the Internal Audit Department perform prior to issuing the audit report?

According to the Institute of Internal Auditors (IIA), (2011), the internal auditing is a team of consultants, a department and a division or other practitioner which independent, have objective assurance and conduct a consulting activity which is designed to add value and improve the organization operations. The internal auditor can help an organization in achieving its objectives by bringing a discipline and systematic approach in order to improve and evaluate the effectiveness of risk management, control and governance process.