Internal Controls: Guidance for Private, Government, and Nonprofit Entities

INTERNAL CONTROLS......Page 3
ABOUT THE AUTHOR......Page 5
CONTENTS......Page 7
PREFACE......Page 9
BUT HOW DOES ALL THAT RELATE TO ME?......Page 13
WE ARE ALL IN THIS TOGETHER......Page 15
SO WHAT IS ALL THIS FUSS ABOUT COSTS?......Page 16
IT CAN BE MANAGED......Page 18
THE FIRST STEPS CAN SEEM THE HARDEST......Page 21
YOU HAVE AN ADVANTAGE......Page 22
UNDERSTAND YOUR OBJECTIVE......Page 24
THE CONTROLS FRAMEWORK AS A GUIDE......Page 28
FORM A PRELIMINARY PROJECT TEAM......Page 31
THE REAL PROJECT: SETTING PRIORITIES......Page 34
PROJECT AND RESOURCE PLAN......Page 35
SOME BACKGROUND......Page 39
THE FIVE COMPONENTS......Page 40
CUBES, TRIANGLES, AND OTHER REPRESENTATIONS......Page 41
THE CONTROL ENVIRONMENT......Page 44
RISK ASSESSMENT......Page 52
CONTROL ACTIVITIES......Page 58
INFORMATION AND COMMUNICATION......Page 69
INFORMATION TECHNOLOGY......Page 72
MONITORING......Page 76
SUMMARY OF RECOMMENDATIONS......Page 81
PURPOSE OF DOCUMENTING FINANCIAL REPORTING CONTROLS......Page 83
VALUE OF CARE IN DOCUMENTATION......Page 85
FORMATS AND TOOLS FOR DOCUMENTING CONTROLS......Page 86
FORMATS AND TEMPLATES, MATRICES AND FORMS......Page 92
DEVELOPING CUSTOM CONTROL OBJECTIVES......Page 95
Appendix 4A: SAMPLE CONTROL OBJECTIVES FOR MAJOR CYCLES......Page 98
ENHANCEMENTS TO SAMPLE CONTROL OBJECTIVES......Page 99
START WITH OBJECTIVES......Page 111
MAPPING THE ENTITY TO THE FINANCIAL STATEMENTS: THE INS AND OUTS......Page 114
CONSIDER RISKS, NOT JUST QUANTITATIVE MEASURES......Page 116
OVERSTATEMENT AND UNDERSTATEMENT......Page 117
BE CAREFUL OUT THERE!......Page 118
‘‘AUDITORS SHOULD DEVELOP AN UNDERSTANDING OF INTERNAL CONTROLS. . .’’......Page 121
MONITORING......Page 125
SAMPLING AND TESTING CONTROLS......Page 128
INFREQUENTLY OPERATING CONTROLS......Page 131
SURVEYS AND INTERVIEWS......Page 132
TESTING AUTOMATED (COMPUTERIZED) CONTROLS......Page 133
TESTING GENERAL COMPUTER CONTROLS......Page 134
SAMPLE SIZE FORMULA......Page 136
FOR SUBSTANTIVE SAMPLING......Page 137
FOR TESTS OF CONTROLS......Page 138
READING A TABLE TO DETERMINE SAMPLE SIZES......Page 139
BACKGROUND......Page 140
EXAMPLES OF WHERE INTERVIEWS ARE USED......Page 141
PLANNING AND STRATEGY......Page 142
TIPS FOR AN EFFECTIVE AND EFFICIENT INTERVIEW......Page 143
SCOPE AND REPORTING ON CONTROLS......Page 145
FOLLOWING UP......Page 147
IT’S INEVITABLE......Page 149
DEFINITIONS OF SIGNIFICANT DEFICIENCIES AND MATERIAL WEAKNESSES......Page 152
KEY FACTORS WHEN ASSESSING THE SEVERITY OF A DEFICIENCY......Page 155
CONDITIONS INDICATING CONTROL DEFICIENCIES......Page 161
EXAMPLES OF EVALUATING THE SEVERITY OF DEFICIENCIES......Page 166
OVERALL ASSESSMENT......Page 170
INTRODUCTION AND PURPOSE......Page 172
GUIDING PRINCIPLES......Page 174
TERMINOLOGY......Page 188
FRAUD-PHOBIC?......Page 191
WHAT DO I DO IF. . . ?......Page 193
THE FRAUD TRIANGLE......Page 194
DETECTING FRAUD......Page 195
SOME COMMON FRAUD RISK AREAS AND SCHEMES......Page 196
DEFENSIVE MEASURES......Page 199
FOOD FOR THOUGHT: SOME EXAMPLES......Page 200
WRAPPING UP......Page 204
Appendix 8A: MANAGEMENT ANTIFRAUD PROGRAMS AND CONTROLS: AN ELEMENT OF THE CONTROL ENVIRONMENT......Page 205
MANAGEMENT ANTIFRAUD PROGRAMS AND CONTROLS......Page 206
PREFACE......Page 208
CONTENTS......Page 209
INTRODUCTION......Page 210
CREATING A CULTURE OF HONESTY AND HIGH ETHICS......Page 211
EVALUATING ANTIFRAUD PROCESSES AND CONTROLS......Page 217
DEVELOPING AN APPROPRIATE OVERSIGHT PROCESS......Page 219
OTHER INFORMATION......Page 224
CONTROLS DESIGN ASSESSMENT—CASH RECEIPTS......Page 231
Part 1: NARRATIVE OF CONTROLS DESIGN......Page 235
CONTRIBUTION TO CASH CYCLE TEMPLATE-CCS......Page 237
Part 2: CONTRIBUTION TO CASH CYCLE WITH CONTROL PROCEDURES-CCS......Page 241
Part 3: CONTRIBUTION TO CASH CYCLE-COMPLETED-CCS......Page 245
INDEX......Page 251