Question

What is the opinion or perspective on this? Please raise thoughtful questions, analyze relevant issues, build on ideas, synthesize across readings and discussions, expand the perspective, and appropriately challenge assumptions and perspectives.

Significance of assessing risk in the internal control process: Risk Assessment is really one of the important component of whole internal control process. To set proper control environment in the organization, management must understand and identify possible risk which can affect their objectives and mission and how much that can affect to the organization. Risk assessments require proper identification, measurement, analysis, and documentation of significant business activities, associated risks, and existing controls. Financial risk assessments focus on identifying control weaknesses and material errors in financial statements such as incomplete, inaccurate, or unauthorized transactions. Risk assessments are conducted in order to identify, measure, and prioritize risks so that attention is placed first on areas of greatest importance. Risk assessments should analyze threats to all significant operations and activities, the sufficiency of mitigating controls, and any residual risk exposures. The results of all assessments should be appropriately reported, and risk assessment methodologies should be updated regularly to reflect changes in business activities, work processes, or internal controls. Based on the assessment, Management can design responses to the risks to ensure that risks are within the defined tolerance level for the defined objectives.

Effective internal controls are necessary for both private and government organizations. As mentioned on Pg.63 of the textbook, Government is constantly scrutinized by the common people. This can be considered as a good control as it makes Government accountable to the taxpayer for each dollar they spent. But at the same time, it imposes restrictions on Government spending even for certain important management functions. Like any Government organization Internal Audit department might not be allowed to spend for audit software which is used by the private companies and which allows internal audit unit to perform their job functions more efficiently. Common people may consider as unnecessary and irrelevant spending. One way this could be achieved by generating awareness about the importance establishing efficient controls in the government organization and how that will impact in providing cost-effective service.

Answer 1

Uses of audit software

1. Reduce the duplication of effort - auditor have to fill the paper works and have to type the notes in the office which creates duplication of work. The software will reduce this duplication.

2. Improved the accuracy of data captured during audit - paper audit are time consuming and has a possibility of errors of data while filling out the information. The software saves the time of audit and the accuracy of data is more and improved.

3. Gather more information during audit - In paper audit, the relevant paper work has to be done and because of that errors may occur in performing audit.

4. Eliminates ambiguity in audit reports - the software eliminates any confusion and ambiguity by making sure evidence is gathered and attached to an audit.

The software is cost effective as it is less costly in long term and it ensures accuracy and flexibility in the audit. The errors will be less than paper audit and audit reports will be more accurate as the evidence and the information of the whole audit will be in the software.