Evaluating Internal Controls

While it is important to have internal control system, the controls will be ineffective if they are not evaluating regularly. All of the procedures and policies in the world mean very little if no one is held accountable. By evaluating internal controls, a company can reduce its risk of fraud schemes and reduce innocent errors that might, otherwise, go unnoticed. Appendix A is a checklist for evaluating internal controls. The phases for evaluating internal controls are "(1) understanding a client's financial reporting controls and documenting that understanding, (2) preliminarily assessing the control risk, and (3) testing the controls, reassessing control risk, and using that assessment to plan the remainder of the audit work" (Louwers, Ramsay,...