Internal Control Audit and Compliance: Documentation and Testing Under the New COSO Framework

Contents

Preface

Acknowledgments

Chapter 1: What We All Share

Need for Control Criteria

Overview of the COSO Internal Control Integrated Framework

Holistic, Integrated View

Revised COSO Internal Controls Framework

What We Must Do

Basic Scoping and Strategies for Maintenance

Where We Depart

Triangle of Efficiency

Controls versus Processes

The Debate Continues

Organization of This Book

Appendix 1A: COSO 17 Principles

Chapter 2: Setting the Scope of Your Documentation Project: Identifying the Core

Start with Business Objectives

After the Initial Year

Mapping the Entity to the Financial Statements: Ins and Outs

Consider Risks, Not Just Quantitative Measures

Inherent and Control Risk

Overstatement and Understatement

Does “In Scope” Imply Extensive Testing?

A Consolation

Be Careful Out There!

Appendix 2A: Summary of Scoping Inquiries

Chapter 3: The Risk Assessment Component

Risk Assessment Principles in COSO

Cost Control

Basics

Likelihood, Magnitude, Velocity, and Persistence

Separate Assessments of Inherent and Control Risks

Role of Assertions

Assertions

Principles 6 and 7: Specify Suitable Objectives; Identify and Analyze Risk

Identifying Risks

External Sources of Risk Information

Internal and External Reporting Risks

Compliance Risks

Disclosed Material Weaknesses in Risk Assessment

Principle 8: Assess Fraud Risk

Auditor Responsibility to Detect Fraud

Antifraud Controls for Management to Consider

Ties to Other Principles and Components

Principle 9: Identify and Assess Significant Change ...