Anti Essays offers essay examples to help students with their essay writing.

Sign Up

Internal Control Evaluation Essay

Open Document

Below is an essay on "Internal Control Evaluation" from Anti Essays, your source for research papers, essays, and term paper examples.

Internal Control Systems

This paper gives a description of three phases of internal control evaluation and presents an example of a comprehensive internal control checklist.

Phases of Internal Control Evaluation
According to Committee of Sponsoring Organizations of the Treadway Commission (COSO), internal control is “a process effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following three categories:
  * Reliability of financial reporting
  * Effectiveness and efficiency of operations
  * Compliance with applicable laws and regulations” (Louwers, Ramsay, & Sinason, 2007, p. 149)
Auditors evaluate client’s internal control by following three sequential logical phases:
  * Obtaining   an understanding of the client’s internal controls and documenting that understanding
  *   Assessing the preliminary control risk
  * Testing   the controls, reassessing risks, and planning substantive procedures

Phase 1: Understanding the client’s internal control
During the first phase auditors gather evidence about the client’s internal control and document their understanding.   Narratives, flowcharts, and internal control questionnaires (checklists) are common audit methods used to study and evaluate the existing internal control.
Narrative description is a document which describes all environmental elements, accounting system and control of a client (Louwers, Ramsay, & Sinason, 2007).
Flowcharts are visualization tools that help to understand flow of information and documents within a company. They represent the inputs, outputs, and sequences of processes. Auditors use flowcharts to understand better the client’s system and identify key control points.
Auditors use checklists to conduct a formal interview with client’s responsible managers. The...

Show More


MLA Citation

"Internal Control Evaluation". Anti Essays. 21 May. 2018


APA Citation

Internal Control Evaluation. Anti Essays. Retrieved May 21, 2018, from the World Wide Web: https://www.antiessays.com/free-essays/Internal-Control-Evaluation-101915.html