Question

(Auditing Principles & Procedures)

List the steps in the audit of internal control over financial reporting (ICFR) , Explan each one.

NO HAND WRITER PLZ, Thank you.

Answer 1

Answer:

Introduction:

The review/audit of Internal Controls over Financial Reporting was distinguished as a major aspect of the Risk-Based Audit Plan for 2016-2019. The arrangement was suggested by the Departmental Audit Committee on September 27, 2016 and thusly affirmed by the Deputy Minister of Foreign Affairs on October seventeenth, 2016.

In 2009, Treasury Board presented the Policy on Internal Control (PIC). Its goal is to guarantee that "dangers identifying with the stewardship of open assets are satisfactorily overseen through successful inward controls, including interior powers over money related reporting."Footnote 1 The PIC expresses that the Deputy Heads (Deputy Ministers (DMs)) are in charge of guaranteeing the foundation, support, observing and survey of the departmental arrangement of inside controls to relieve chances in the accompanying general classifications:

The viability and effectiveness of projects, tasks and asset administration, including shielding of advantages;

The dependability of budgetary announcing; and

Consistence with enactment, controls, strategies and appointed experts.

Inner Controls over Financial Reporting (ICFR) give a methods by which administration and clients of budgetary proclamations can have certainty that the money related articulations decently reflect monetary exchanges. The PIC necessitates that the DMs and Chief Financial Officers (CFO) sign a Statement of Management Responsibility Including Internal Control over Financial Reporting. This report goes with the departmental Financial Statements and recognizes the obligation of administration for guaranteeing the support of a viable arrangement of ICFR.

Moreover, ICFR gives data that guides in the readiness of interior and outer money related reports and explanations as per strategies, mandates and models. At last, ICFR gives confirmation that incomes got and consumptions made are as per designated experts, and unapproved or wrong exchanges that could materially affect budgetary data and money related explanations are anticipated or distinguished in an auspicious way.

The ICFR procedure :

The ICFR procedure is a recorded arrangement of exercises that exhibit that a powerful arrangement of inward controls is set up and operational. It guarantees that due perseverance expected of the DMs and CFO to sign the Statement of Management Responsibility Including Internal Control over Financial Reporting, which goes with the departmental Financial Statements (the Annex), has been finished. The ICFR procedure comprises of three fundamental stages: chance appraisal, control testing, and revealing. For a visual portrayal of the ICFR procedure, allude to Appendix A.

1. Hazard evaluation :

The initial step of the ICFR procedure is to lead a hazard appraisal. The hazard evaluation helps in the advancement of the yearly arrangement, figuring out which procedures will be inspected. The Internal Control group finished a hazard appraisal for all business forms in view of the Department's 2013-14 money related explanations. It included allotting the budgetary proclamation esteems between the Department's business forms and deciding the most material business forms inside the Department. The evaluation on whether the Department had a powerful arrangement of inside controls depended on the most material business forms gathered as pursues:

Element Level Controls (ELCs) – present over the Department and incorporate estimates taken by administration to prepare staff to satisfactorily oversee hazards through bringing issues to light, giving proper information and apparatuses and in addition creating abilities.

Data Technology General Controls (ITGCs) - with respect to the Department's general IT foundation and frameworks.

Business Process Controls - both manual and robotized, are implanted in business forms appropriate to money related exchanges. These controls may change after some time because of changes in the Department's business forms.

It is normal that a hazard appraisal will be led on an intermittent premise to guarantee that the most material business forms are being surveyed.

2. Control testing :

Following the hazard evaluation, the Internal Control group conducts control testing on every one of the procedures to survey in the event that they are working successfully. Control testing incorporates three parts: plan adequacy testing, working viability testing, and progressing checking.

Outline adequacy testing :

The initial step of control testing is outline adequacy testing. This testing decides if the association's controls are intended to fulfill the association's control destinations, including counteracting or distinguishing mistakes or misrepresentation that could result in material misquotes in the budgetary articulations. This progression necessitates that the Internal Control group distinguishes the most noteworthy hazard exercises in the business forms and the key controls that would moderate these dangers.

Before financial year 2015-16, every single material process at the Department were evaluated for outline viability.

Working adequacy testing :

Once the plan adequacy testing has been fulfilled, each procedure experiences working viability testing. Working viability testing evaluates if the key controls (distinguished amid outline adequacy testing) are working as proposed. Working adequacy testing is utilized to exhibit the unwavering quality of the key powers over some stretch of time, diminishing dangers identified with monetary detailing. Any huge control insufficiencies recognized will require an administration activity intend to address the control shortcomings. All working viability testing must be finished before initiating continuous checking of the procedures.

Preceding financial year 2015-16, every material procedure at the Department were evaluated for working adequacy, except for the Transfer Payments for Development Programs process, which was finished in monetary year 2015-16.

Continuous observing :

Once the plan and working viability testing have both been finished on the business forms, the procedures can go into the continuous observing period of the control testing. Progressing observing is characterized by the Framework as "intermittent hazard based appraisals according to a multi-year checking plan". Continuous observing testing incorporates: the approval of the dangers that should be relieved; a revive of the procedure flowcharts and accounts to guarantee that they speak to the procedures as they are at present working; and, an assessment of the key control exercises to affirm that they are as yet important and working as proposed.

3. Announcing :

Following the testing of controls, a report is created to finish up on the viability of the arrangement of controls of the business procedure. In the event that control shortcomings were recognized amid testing, they are accounted for to the procedure proprietors with prescribed activities to moderate them.