Checklist For Evaluating Internal Controls Essay Example for Free

Checklist For Evaluating internal Controls undertakeFor publicly traded companies, the Sarbanes-Oxley Act of 2002 requires an audit of internal controls. The purpose of an internal control evaluation is to evaluate risk of exposure, which offers auditors a basis for audit planning and provides useful information to management (Sox Law, 2006). Auditors typically use the five staple fiber components of internal control to approve the entire system. According to Louwers, Ramsay, Sinason, and Strawser (2007) the five components to internal controls include control environment, risk assessment, control activities, monitoring, and information and communication. Control environment drives the tone of the organization and includes the integrity, ethical values, and competence of the companys people (Louwers, Ramsay, Sinason, Strawser, 2007). hazard assessment involves a thorough assessment which identify(s) risks, estimate their significance and likelihood, and consider how to m anage the risks (Louwers, Ramsay, Sinason, Strawser, 2007).Control activities involve specific actions which help ensure that managements goals and projections are met. Monitoring involves the continuous assessment of internal controls. Information and communication relates to the efficiency and reliability of information and communication regarding how the information is presented and communicated to users. Internal controls protect the pecuniary information and operations of a business. The development and implementation of these controls are typically the responsibility of the business owners. Internal or external audits may be used to gauge the efficiency of internal controls. This audit mainly takes place following a standard process of risk measurement regarding the business operations and fiscal information. The measurement data is most effectively determined by using an internal control checklist.Checklist manikin One Understand and Document the Clients Internal Control O btaining an UnderstandingControl surround EvaluationRisk treasurement EvaluationInformation and Communication AssessmentPhase Two Assess the Control RiskPhase Three Test Controls and Review Control RiskReassess Controls billing of the Test of ControlsReassess the Control Risk