AUD — Quick Sheet
Understanding the Entity & Internal Control
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One-minute revision
- COSO components = CRIME: Control environment, Risk assessment, Information & communication, Monitoring, Existing control activities
- Understanding internal control is required in every audit; testing operating effectiveness is not (only if relying on controls)
- Understanding = evaluate design + determine implementation
- Deficiency < significant deficiency < material weakness (reasonable possibility of material misstatement)
- Significant deficiencies and material weaknesses → communicate in writing to those charged with governance
- Segregation of duties = ARC: Authorization, Record keeping, Custody