Forex
What are the differences between auditor, internal auditor and external auditor?
The essential difference between public accounting professionals, is based on the extent of review that each company makes, here are basic generalities of each:
Auditor
The auditor is responsible for ruling subject to the auditing standards generally accepted financial statements of the company.
You should also review and systematically evaluate the components and elements that make up the internal control in a timely and independent in the manner prescribed by law. The auditor must perform a comprehensive audit and must set out an independent professional opinion of the evaluation and supervision of control systems.
In its report to determine whether the financial statements are prepared on generally accepted principles, if you have met legal standards to evaluate the efficiency and effectiveness in achieving the objectives set by the company, good management resources and evaluating the internal control system to conceptualize on their management.
Internal Auditor
Is appointed by the administration of the organization, is responsible to verify the strengths and adequacy of the controls that apply within the company. The review should have a full scope of the company, ie cover financial operations, administrative or otherwise. He is appointed by the administration of the organization.
The report made must provide all relevant data regarding the effectiveness and efficiency of operations, the adequacy and reliability of financial reporting and compliance with regulations of the company.
External Auditor
Is appointed by the shareholders’ meeting must be made by a public accountant alien and external to the company, it performs a review of the financial operations of the company to express an opinion on the reasonableness of the figures in the financial statements based on accounting principles generally accepted, giving the results of its review, to increase the usefulness of the information has.
The report or opinion that the external auditor provides public faith in the reliability of financial statements and the credibility of the management who prepared them.
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What is the importance of financial management from the point of view of the auditor?
The financial management and management are of great importance to the task of the auditor, in the sense of control of all operations, in making decisions in the pursuit of new sources of funding to maintain the effectiveness and operational efficiency in the reliability of financial reporting and compliance with laws and regulations.
FINANCIAL MANAGEMENT
Financial management is closely related to decisions concerning the size and composition of assets, the level and structure of the financing and dividend policy by focusing on two primary factors such as profit maximization and wealth maximization to achieve these objectives one of the most used tools for financial management to be truly effective is the control of management, which ensures a high level in achieving the goals set by the creators, managers and implementers of the financial plan.
MANAGEMENT CONTROL SYSTEM
Is active or proactive when working with the proper functioning of management, structured in key stages, these are:
Nested Target setting short and long term
Establishment of plans, programs and budgets to quantify the organizational structure objetivos.Establecimiento (Implementation and Control)
Measuring, recording and control of results
Calculation of deviations
Understanding the origin and causes of deviations
Corrective decisions.
Objectives of Management Control
Global interpretation of all management functions.
Integrating strategic and operational variables.
Correct decision-making present and future.
Building appropriate management indicators.
Continuous improvement of the results.
Correction on the fly deviations
Reacting to the changes.
OTHER INSTRUMENTS OF CONTROL MANAGEMENT
Financial Accounting
External Audit
Management Accounting
Analysis of ratios
Audit and internal control
Control panel
Performance audit.
Use the search engine to find links portal management and financial planning.
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Internal control. A responsibility of all members of the business organization.
The internal control was designed, implemented and considered the most important tool for achieving the objectives, efficient use of resources and for productivity, and prevent fraud, errors, violation of accounting principles and standards, fiscal and tax.
Theoretical:
Internal control is a process executed by the board of directors, management and staff of an institution designed to provide reasonable assurance with a view to achieving objectives in the following areas:
Effectiveness and efficiency in operations.
Reliability of financial reporting.
Compliance with laws and regulations.
Internal control comprises the plan of organization and all methods and measures adopted within an organization to safeguard its resources, verify the accuracy and veracity of their financial and management information, promote operational efficiency, enhance the observation of prescribed policies and ensure compliance with the goals and objectives set.
Disclaimer
All members of the organization, whether public or private, are directly responsible for the internal control system, this is what ensures the overall efficiency.
Objectives of internal control:
1. Obtaining financial information timely, reliable and sufficient as a useful tool for the management and control.
2. Promote the acquisition of technical information and other non-financial information for use as useful for the management and control.
3. Ensure appropriate measures for the protection, use and maintenance of financial, material, technical and other resource owned by the entity.
4. Promoting organizational effectiveness of the entity to the ogre of its objectives and mission.
5. Ensuring that all institutional actions in the body are developed within the framework of constitutional norms, laws and regulations.
Elements of internal control:
All the components of internal control should gravitate around the principles of quality and appropriateness, among them are:
Planning, Organization, Procedures, Personnel, Authorization, Information System, Monitoring.
Sub-elements of internal control
These are the well-defined objectives and plans with the following characteristics:
Possible and reasonable, clearly defined in writing, Tools, Accepted and Used, Flexible, communicated to all staff, supervision.
Components of internal control
Control Environment, Risk Assessment, Control Activities, Information and Communication, Monitoring
Classes of internal control:
The internal control is based on protection across all relevant instruments, adequate coverage of possible contingencies and verification of the preservation and recording systems.
Internal Control System
The internal control system is the set of all elements where the focus is on people, information systems, monitoring and procedures.
This is vital because it promotes efficiency, ensures the effectiveness, prevents any infringement of rules and generally accepted accounting principles. The heads of organizations should establish a control environment, a set of direct control procedures and limitations of internal control.
Elements of the system of internal control:
1. Definition of the objectives and goals of both general and specific, in addition to the formulation of operational customers as necessary.
2. Definition of policies and action guidelines and procedures for the execution of processes.
3. Use or adopt an organizational system for executing the plans.
4. Precise delineation of authority and responsibility levels.
5. Adoption of standards for the protection and rational use of resources.
6. Management and personnel administration in accordance with an adequate evaluation system.
7. Implementation of the recommendations resulting from evaluations of internal control.
8. Mechanisms that allow organizations to know the views that have their users or customers on the management developed.
9. Establishment of modern information systems to facilitate the management and control.
10. Organization of reliable methods for evaluation of management.
11. Establish induction programs, training and updating of managers and other staff.
12. Simplification and updating of standards and procedures.
In summary the control environment, accounting system, internal controls, accounting and management.
Procedures for maintaining good internal control:
1. Delineation of responsibilities.
2. Delimitation of general and specific authorizations.
3. Segregation of incompatible functions in nature.
4. Healthy practices in the development of exercise.
5. Division of processing each transaction.
6. Selection of qualified staff, skills, abilities and morality.
7. Rotation of duties.
8. Policies.
9. Written instructions.
10. Control accounts.
11. Evaluation of computer systems.
12. Documents prenumbered.
13. Avoid use of cash.
14. Minimal use of bank accounts.
15. Immediate deposit funds intact.
16. Housekeeping.
17. Identify key control points in each activity, process or cycle.
18. Control charts.
19. Inspections and frequent physical inventories.
20. Update security measures.
21. Proper records of all information.
22. Retention of documents.
23. Using indicators.
24.Prácticas self.
25. Defining clear goals and objectives.
26. Do staff know that doing things.
Some internal control procedures in a company:
1. Retching periodic box to ensure that transactions made are correct.
2. Control of aid workers.
3. By purchasing liability to third parties, these are made only by authorized persons also having a rationale.
4. Delineate roles and responsibilities at all levels of the organization.
5. Make a physical count of assets that actually exist in the company and compare them with those recorded in the books.
6. Analyze whether the people doing the work inside and outside the company is right and they are doing in an effective manner.
7. Having a numbering of the accounting vouchers consecutively and user-friendly for those responsible for such information.
8. Control access of unauthorized persons to the various departments of the company.
9. Verify that you are complying with all regulations as tax, fiscal and civil.
10. To analyze whether financial returns and investments made are yielding the expected results
There are many more and varied internal control procedures that can be applied to the company, as each implements the best suited to the activity that develops and provides the most benefit.
Limitations of the effectiveness of internal control system:
1. Never guarantees the fulfillment of its objectives.
2. Solo provides reasonable assurance.
3. The cost is linked to the benefit it provides.
4. Repetitive transaction is routed to not exceptional.
5. There may be misunderstood human error, carelessness or fatigue.
6. Potential for collusion to evade controls that depend on the segregation of duties.
7. Violation or failure of implementation by senior management.
After the implementation of internal control system should be tested with continuous feedback to find possible failures and control as quickly as possible and avoid problems of greater magnitude.
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AUDIT AND CONTROL PROGRAM FOR THE MANAGEMENT OF DOMESTIC AVAILABLE
For each company’s internal control program and audit may vary, but the following is an outline of how to apply these elements within and utility organizations that provide for management analysis and decision making of and senior management.
CONTROL PROGRAM AND INTERNAL AUDIT FOR THE COMPANY
To validate the information the company supplied over the item available, setting the audit program and internal control by developing the points listed below:
1. Review and assess the strength and / or weaknesses of internal control system and based on that review:
Perform compliance testing and determine the extent and timing of audit procedures applicable under the circumstances.
Prepare a memorandum or report the result of the work, conclusions and comments about the strength and / or internal control weaknesses that require immediate action taken or may be appropriate points for the letter of recommendations.
2. Plan and conduct substantive tests of the figures showing the financial statements, which are necessary under the circumstances.
DESCRIPTION:
The available is defined as the group which includes accounts that record cash resources immediately, or partially available to the economic entity and can be used for general or specific purposes, within which we can mention the case, the deposits in banks and other financial institutions.
Management Available.
* Clearly identify the roles, responsibilities and obligations of staff who are responsible for the custody of cash and payment authorization prior
* In search of greater security to the handling of cash on hand is advisable to determine a maximum amount for individual payments
* Control who and how are payments made by the box.
* Make contracts backed warranty policies for safeguarding cash.
EVIDENCE OF COMPLIANCE:
These seek to obtain evidence about internal control procedures, in which the auditor found confidence in the system to determine if they are being applied in the manner prescribed.
The auditor will seek to ensure the existence of control, the effectiveness with which it is exercising this control and to determine whether controls have been applied continuously throughout the period.
Type of Transaction: Cash Check input:
A. The objective is to determine if the controls operate as intended and to observe the existence and responsible use of equipment used in the cash receipt process.
B. Observation of the work done by managers both overall cash and cash minors to determine compliance with the cash receipt procedures and that their operation is consistent with the management of pre-established company policies before.
C. Conducting interviews with Company personnel to determine whether they match the procedures described in terms of cash determined in the operating manuals and internal control plans.
D. Repetition of the internal control procedures in order to determine whether the cash management process step by the respective controls that allow total truthfulness and responsibility of the manager to handle general and smaller boxes.
Confirm the carrying of identity cards to visitors in order to avoid confusion within the organization.
Note that there really is separation of duties between the person authorizing the payment of a bill and the cashier.
To examine the existence of documents that support the daily tonnages effective as a means of controlling the inputs and outputs of this, determining compliance with established rules for handling.
Observe the requirements of personal income to the treasury departments to determine if additional controls are needed to give greater security to the general cash management, or direct access to offices of people who handle juvenile cases.
Verifying making adjustments to the accounts of banks when the respective reconciliations have received thus controlling the balances of different accounts.
Verify the existence and implementation of a management policy available.
To determine the efficiency of the policy available from the company.
Verify that the account holders registered as available, are in order and according to the laws.
Watch for the crediting of accounts of proper recording available.
Check that there is a complete analysis of management available to identify failures and apply the necessary corrections
Check if the available information about the company, due date is passed promptly to the administration and managers within the company.
Verify the existence of a manual of personnel functions of the accounts available.
Like the knowledge and performance of this by the employees.
Must be maintained in a safe place, preferably by mechanical means, such as safes, important documents such as checkbooks, securities, credit cards with signatures are authorized to issue checks, security keys, etc..
SUBSTANTIVE TESTS:
Type of Transaction: Cash and Banks
To determine the correct balances.
A. Correction Arithmetic
Add some relationships that presents the company and could be included within the audit working papers.
Ancillary to Reconcile the balances of general ledger accounts.
B. Existence or occurrence, rights and obligations and valuation or allocation,
Count the cash on hand:
Control all cash and negotiable instruments held by the company until all funds have been counted, insisting that the effective charge of this
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Objectives and internal control questionnaire for the available
The assessment of internal control system of an enterprise must be supported by the responses that result in the internal control questionnaires conducted in the programs and procedures that the financial auditor has to perform well in this case the available management Entity
OBJECTIVES OF THE REVIEW
Overall objective:
1. Verify the correct valuation in accordance with generally accepted accounting principles and their proper financial statement presentation.
2. Obtain reasonable assurance about:
A. All concepts related to the available have been estimated properly.
B. The values of the component accounts are properly classified and disclosed in accordance with its terms.
Specific objectives:
1. Verify the physical existence of liquidity resources immediately available to the entity.
2. To determine whether the funds and deposits which are presented within cash item, box and banks comply with the basic conditions of availability.
3. Check if all of the existing funds and deposits.
4. To determine whether funds of cash and deposits that are represented in the financial statements are true
5. Review the proper management of policies procedures and practices followed in the management of cash resources.
6. Verify the existence of functions and procedures manuals of cash.
Just
The control is a support tool for obtaining business objectives
INTERNAL CONTROL QUESTIONNAIRE
Period evaluated: January 2001-December 31/20XX
Assessment Date: January 20XX
Date of preparation: February 20XX
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Procedures for the available control
The control procedures are made to the available tool with the auditors to assess the proper implementation of audit programs that exist within the company.
Many of the problems that arise within the company management are available due to wrong implementation of controls that are made on the most liquid assets, then presents some of the procedures to be in account auditors for the evaluation of this item.
CONTROL PROCEDURES FOR AVAILABLE
1. Prepare summary sheets that break down the cash for each of its members concepts reflecting previous and current balances according to the records of the entity audited.
2. For a selected review period and chronological sequence number of cash receipts and making sure it is complete without amendment. To record any irregularities.
3. Get a list of all fixed capital, their respective officers and their location. Determine if there is any significant amount of money in cash to be deposited, the date of tonnage.
4. Selectively take cash and daily movements:
A. Check the transactions giving rise to the revenues and expenditures, setting the record in the auxiliary, that the supporting documents be attached.
B. Check the arithmetic operations and legal aspects of documents that give rise,
C. Add cash receipts and vouchers crusaders against appropriation and auxiliaries. That cash was collected in full and in the state in which it was received.
5. Ask for confirmation of bank accounts that had movement during the year, the dates it deems appropriate.
6. Obtain bank statements for the last month and first month after the date reviewed.
7. Take selectively move and confront the items recorded in the books of banks against appropriation bills.
A. Check reported appropriations and cross against the bank statements.
B. Check all consignments in transit or those recorded by the bank and not by the entity.
C. Investigate credit and debit notes conciliatory.
8. Verify that all background discharge is made by turning individual checks based on receipts legalized.
9. In the review of payments for bank charges, interest, financial loans and services, verify that the authorization of payment or bank debit note is in accordance with the operation.
10. For the analysis of payments for any reason to verify that the respective receipt is recorded in the current account number of the check, bank name and net worth turned.
11. Take note of bank reconciliations (preferably by obtaining a copy) prepared by the administration verifying that they are prepared in accordance with accounting principles as follows:
A. Prepare a spreadsheet showing for each bank: balance per books, reconciliations debit and credit items, balance according extract arithmetic.
B. Select both debits and credits of the bank book and identify these movements against the bank statement, or against the settlement.
C. Confront the balance against the greatest or auxiliary and against the statement.
D. Investigate all items conciliatory.
E. Verify that shows up on the list to be recovered: date, payee, account and value.
F. Review all debit and credit notes verifying that such charges or credits are properly allocated to the respective accounts or are in the settlement (it should apply for a duplicate debit notes made by the bank to keep it as support).
G. Compare against the cash book those checks have been some consideration that turned a later date.
H. Browse dates of payment of the checks selected in the test to ensure they have not been rotated before the date on to examine the earrings.
I. Investigate all those checks deposited by earlier.
12. Verify that the collection received be deposited in full and in a timely, at least three days before and after the review date.
13. Investigate and review the records of important checks that have not been paid by the bank during the month following the review date.
14. Investigate all checks deposited prior to the date of the settlement which have been returned by the bank during the month following the same settlement.
15.Indagar on all extraordinary or abnormal transactions for a month before and after the review date. (It is advised that work under the principle of materiality)
Background
All procedures should be based on generally accepted accounting principles, as in the general principles of auditing
16. Ensure that all transactions affecting the entity that handles accounts in foreign currency, are authorized by officials designated and comply with legal and administrative provisions in this regard.
17. Confirming transactions that use these accounts are recorded based on the media to justify the transaction in foreign currency, incorporating in a timely manner the exchange rate prevailing at the date.
18. Circular 100% of the balances of bank accounts that are controlled by the treasury, both domestic and foreign currency, obtaining confirmation thereof to the closing date of the verification of transactions that originated them.
19. Ensure that bank confirmations received include all information required to be verified.
20. It is recommended to verify that the confirmations come directly from the lender.
21. Browse selectively National currency bank reconciliations. And full of foreign currency.
22. Confront the adjustments to the current exchange rate of foreign currency accounts.
23. Practice tonnage of funds and securities in the presence of the cashier maintaining control over the funds until this is over:
A. Request count of securities by the manager and take note of its composition.
B. Relate the receipts issued and found in the box on the date of tonnage verifying information such as number, date, value, opinion, etc..
C. Number and value of the last receipt recorded.
D. Set as unlike the last receipt numbers entered, issued, and earrings of entry with its value.
E. Get explanation of any normal game or difference or exception.
F. Signed to record the confirmations of the practical test.
G. Require explanation of each if necessary to responsibly with regard to the materiality of the facts found.
24. Crossing the result of retching with the numbers of books.
25. Confronting all cash count brackets are properly approved to date.
26. It is recommended to know the previous amounts of the limits to authorize petty cash expenses.
27. Practice lower cash counts at the time deemed appropriate box using the general procedure and those that are deemed necessary.
28. Based on information obtained from previous procedures to prepare the report.
29. Obtain the signature of the person under whose custody is the box and the boxes under general, acknowledging receipt of cash, documents and other items belonging to the fund.
30. To examine the original evidence of disbursements and cash receipts rectify minor and general renewal with proof of cash distributions inspecting and approvals.
31. Compare the cash reimbursement vouchers to the registration of policies, the book costs, cash expenditures and other media. If you find any differences make the necessary adjustments prior authorization.
32. Reconcile the petty cash balance with the highest in the balance sheet date.
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Sufficient disclosure
Introduction.
When performing an audit and the preparation of financial statements, the concept of sufficient disclosure must constantly be borne in mind, for proper disclosure is the basis for proper financial reporting.
This implies that all data and all relevant information should be presented in the financial statements in accordance with those set out in the bulletin A-5 of the Accounting Principles issued by the Accounting Principles Commission on 1 July 1974.
It is important to take care that meets the accounting principle because if no errors would occur to make decisions based on the information presented in financial, which would consequently damage and involvement of trusted third parties in the information disclosed.
In this paper we present step by step what this principle, we see the concept of an accounting principle, the concept of the principle of sufficient disclosure, the qualities of financial reporting, financial statements relating to information from different points of and utility view, the notes to the financial statements, which involves submission of financial statements with information considered relevant, the special rules applied to filing financial statements, the parts of the financial statements and the disclosure of accounting policies.
Revelation enough.
The accounting principles
The accounting principles are basic concepts that establish the definition and identification of the economic entity, the basis of quantification of operations and the presentation of quantitative financial information through the financial statements.
The principle refers to information is to:
Ø Revelation enough. (A-1 Accounting Principles) from 1 July 1974 newsletter is in effect to this principle of accounting.
Definition:
Revelation enough:
The accounting information presented in the financial statements must contain a clear and understandable everything you need to judge the results of operations and financial position of the entity.
In the bulletin A-5 of the Principles of accounting is the accounting information of economic entities.
Introduction.
The financial accounting purposes are:
A) to achieve an end report, which stems from the nature and relationship of accounting with the surrounding economic environment, namely the production and exchange of goods and services that carry out various economic entities.
Economic entities energize the presence of factors of production, by implementing an administrative organization, within which are included the monitoring tools and information necessary for decision making.
Financial accounting provides an important part of measuring elements that assist the various stakeholders to take decisions relating to economic entities.
The quantitative information produced accounting is required by the participants of economic activity:
A) Monitor and evaluate the performance of entities.
b) Compare your results with other periods and other entities.
c) Evaluate your results in light of the stated objectives.
d) Plan operations.
e) estimate their future within the economic framework that surrounds them.
The accounting information of financial institutions is instrumental in the decisions of current and potential shareholders, lenders, debtors, creditors and third parties directly or indirectly related to these entities.
This multitude of different interests involved and determine that the accounting information of general use and therefore must comply with the requirement of usefulness for different interest charged.
However, the user’s knowledge, identifying their needs and common interests are elements that contribute to determine the type of information required by financial accounting .*
Financial Statements.
General Concepts.
The transactions carried out by an economic entity and certain identifiable and measurable economic events that affect it, are measured, recorded, classified, analyzed, summarized and then reported as information, primarily in the following ways:
A) Information relating to a point in time, resources and financial obligations of the entity, which is presented in a document commonly referred to as balance sheet. ¨
B) Information relating to income from operations in a given period, which is presented in a document commonly known as income statement. St
C) Information on changes in the entity’s financial resources and their sources, to disclose the financing and investment activities, which is presented in a document called the statement of changes in the situation financiera.Æ
The documents listed above, are known as financial statements through alphanumeric representations described and classified by securities, commodities, groups, descriptions, quantities and explanatory notes, the statements of the entity managers make on their financial situation and results of its operations.
According to the booklet “Outline of the basic theory of financial accounting,” says that a proper presentation of entity consists of:
Ø Balance Sheet.
Ø Income Statement.
Ø Statement of changes in financial position.
Should reveal general aspects of the performance of the economic entity, specifically with regard to:
Financial Structure. (Shareholders, partners, potential investors)
§ Changes in financial structure. (Partners)
§ Liquidity. (Creditors, suppliers)
§ Ability to pay. (Creditors, suppliers)
§ Productivity. (Workers, chambers in which are grouped together, census)
§ Profitability. (Potential investors, partners.
Notes to the financial statements.
For the space limitation is common that the financial statements do not contain all the minimum necessary information, which is why explanatory notes are presented according to the special rules for filing issued by the Committee on Accounting Principles, or deemed to administration of the institution is relevant to unveil.
The notes to the financial statements are explanations that expand the origin and significance of the facts and figures presented in those states.
Example: (From the book “The Finance Company” by Joaquin A. Moreno Fernández Editorial MIPA)
Balance Sheet. Currency in thousands of pesos
Statement of financial position.
At December 31, 2001.
Active.
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Audit program for the property, plant and equipment in the company
To validate the information the company provides, with respect to property, plant and equipment should be setting an agenda for developing audit points required by the rules generally accepted auditing
The review and assess the strength or weaknesses of internal control system in the management of property, plant and equipment are of vital importance to ensure the proper implementation of all the tests described in the audit program, and based on that assessment of compliance testing in order to determine the extent and timing of audit procedures applicable under the circumstances, as well as substantive testing of the figures showing the financial statements prepared a report with the result of the findings achieved and comments on the internal control weaknesses that require immediate action to take should be identified and corrected in the shortest possible time.
Depending on the circumstances that arise within the organization, should develop an audit program for this item with the following parameters:
Conceptual Foundations
This component represents the tangible assets acquired, constructed with the intention to employ them permanently, for the production or supply of other goods and services, for rental or for use in the administration of the economic entity, not intended for sale in the ordinary course of business and whose useful life exceeds one year.
The value of these assets includes all expenses and charges necessary to place them in a position to use, such as engineering, supervision, taxes, interest, etc..
This value should be increased with the additions, improvements and repairs that significantly increase the quantity or quality of production or the life of the asset.
EVIDENCE OF COMPLIANCE
1. Verify the existence and implementation of a policy for the management of property, plant and equipment.
2. To determine the efficiency of policy for the management of property, plant and equipment.
3. Verify that the media Property plant and equipment are in order and according to the laws.
4. Observe the movements in fixed asset accounts are recorded properly.
5. Check that there is a complete system of control of fixed assets, current and appropriate to the conditions of the company.
6. Verify that the changes in property, plant and equipment are properly authorized.
7. Perform physical counts of property, plant and equipment available periodically.
8. Verify that fixed assets are adequately insured.
9. Check the status of fixed assets is optimal and that security measures are properly implemented.
10. Verify that adjustments to assets for inflation and depreciation are calculated and recorded adequately and timely.
11. Confirm that the conditions of conservation of the assets are the optimum.
12. Verify the existence of a manual of personnel functions, management of property, plant and equipment. Like the knowledge and performance of this by the employees.
The property, plant and equipment are those assets which are intended for sale in the ordinary course of business and whose useful life exceeds one year
SUBSTANTIVE TESTS
1. To determine whether additions are properly capitalized items and represent actual costs of the assets physically installed or constructed.
2. Check the foundation for the valuation of fixed asset accounts.
3. Check under maintenance or other accounts of result, important items that should be capitalized
4. Check costs and depreciation or amortization respective by low, obsolescence or real important provisions have been eliminated from the accounts.
5. To determine whether devaluations have been recognized in the respective accounts, and accounted for in accordance with statutory accounting principles and generally accepted.
6. Observe the provisions and accumulated depreciation are adequate without being excessive, and are calculated on a basis acceptable and consistent with those applied in previous periods.
7. Check tables of useful lives of assets, which will be used in calculating depreciation.
8. If the balances of accumulated depreciation and amortization, are reasonable considering the probable life of the assets and potential scrap value.
9. Verify that the account of construction in progress can not contain charges for repairs and maintenance.
10. Check whether the authorizations for the acquisition of new elements indicate the units will be replaced, according to the corresponding contributions.
Review
Although the study found that these tests can make change, I hope the above will serve as a guide to support the analysis of internal control within the company for these items
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Introduction to the evaluation of internal control system
The evaluation of internal control system defines the strengths and weaknesses of the business organization with a quantification of all resources
By examining and objectives of internal control, records and financial statements evaluation of establishing confidence that an entity should present to society. The evaluation of internal control system based on principles, rules, standards, procedures and systems of recognized technical value are the foundation of making a good financial audit.
S.O.S.
The financial auditor must ensure they comply with all appropriate and necessary in the implementation of the evaluation system of internal control
METHODS OF EVALUATION
1. Statistical sampling
In the process of evaluation of internal control auditor should review high volumes of documents, which is why the auditor is forced to program selective evidence to make inferences about the reliability of its operations.
To give certainty about the objectivity of a screening test and its representative, the auditor is the use of statistical sampling, for which it should take into account the following key:
The sample must be representative.
The sample size varies inversely with respect to the quality of internal control.
The examination of the documents must be comprehensive to enable a proper inference.
There is always a risk that the sample is not representative and therefore that the conclusion is inadequate.
2. Questionnaire Method
It consists of the evaluation based on questions which must be answered by those responsible for the different areas under consideration.
Through the responses, the auditor will obtain evidence to be finding alternative procedures which will help determine if the controls operate as designed.
The use of questionnaires to help identify critical areas in a consistent and reliable.
3. Narrative method
It consists of a detailed description of the most important procedures and characteristics of the internal control system for different areas, citing records and forms involved in the system.
4. Graphical Method
Also called flow charts, is to reveal or describe the organizational structure of the areas under review and the procedures using conventional symbols and explanations that give a complete picture of the procedures of the entity.
It has the advantages that:
Identifies the lack of financial and operational controls.
It offers an overview of the operations or entity.
Identify deviations from procedures.
Identify procedures left over or missing.
It facilitates understanding of the auditor’s recommendations to management on accounting or financial matters.
The assessment must ensure the integrity and accuracy of operations performed by the economic entity
TECHNICAL EVALUATION
1. Ocular verification techniques
Among these are:
Comparison.
Comment.
Selective review.
Tracking.
2. Verbal verification techniques
Inquiry.
3. Written verification techniques
Analysis.
Conciliation.
Confirmation.
4. Documentary verification techniques
Checking.
Computing.
5. Physical verification techniques
Inspection.
Review
All these evaluation techniques can be found applied in different types of items that have to do with this issue in the financial channel
ASSESSMENT FORM
The evaluation form graphic and quantifies the level of performance of the company, is based on:
The criteria or areas to be evaluated.
The management of commitments.
The sub-areas or units within the respective assessment area.
Rating control.
Marks deviations.
Compliance with recommendations.
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Objectives, program and audit procedures for investment
The financial auditor must adapt its test fully established targets for programs and procedures that provide a certain reliability of the information submitted by the company
Investment is defined as the group which includes accounts recorded investment in stocks, shares or parts of social interest, securities, commercial paper or other negotiable document acquired by the economic entity on a temporary or permanent, with the purpose of maintaining a secondary liquidity reserves, establish economic relations with other entities or to comply with laws or regulations.
Represented investments in stocks and shares or parts of social interest, are recorded at historical cost.
The other investments such as bonds, certificates, licenses, etc., Shall be recorded at nominal value. However, in case of differences between this and the historical cost, in order not to violate basic accounting rules “valuation or measurement, such differences will be controlled through additional auxiliary accounts of investment, specifically in the titles which presents the difference.
For this purpose, the items will be used Amortizing discount or premium amortized.
The historical costs include amounts incurred for the purchase of investment, which, in the case of investments in stocks and shares represented or parts of social interest will be adjusted monthly or annually, recognizing the inflationary effect in accordance with the provisions of existing laws.
When the economic entity has as its principal activity of rentier capital when selling their investments must charge account 6150 – Financial Activity. If such investments are made in development of secondary activities, if the value of the sale is greater than the book value, the difference shall be paid to the account 4240 – Gain on Sale of Investments – but if the sales value is lower , it will be loaded to the respective account of provisions.
If non existent or insufficient provision, the balance will be debited to the sub 531 005 – Sale of Investments. When you have investments in subordinate, for which the economic entity has the power to provide that in the next period will transfer their profits should be accounted for under the equity method in accordance with existing legislation.
Audited
General Objectives
The design of tests to provide reasonable assurance that:
1. The investments were approved, they exist and are owned by the Company on the date of the Balance Sheet.
2. All investments held by the company are included in the balances of the accounts.
3. The securities which are investments in the financial statements are correct and properly disclosed.
4. The income from the investment gains and losses on sales and margins adjustments including assessment, are adequately reflected in the Financial Statements.
5. The investments are correctly classified as components of short and long term.
6. Compliance with the Generally Accepted Accounting Standards.
7. The investment items are recognized in the unit of measurement.
Specific Objectives
1. Get assurance of the reality of the recorded values.
2. To determine the recovery of investment accounts.
3. Check which is conducted an analysis of planning and adequate investment.
4. Learn about the most representative investment transactions in relation to the proceedings.
5. To determine the efficiency and effectiveness of the methods of investment by the company.
6. Establish compliance with investment policy
The investment should have a strong control by financial managers, since they are in a moment which can give the organization an important resource contribution
PROGRAM AUDIT
To validate the information the company provides with respect to investments, establishes the following audit program to develop the points described below:
1. Review and assess the strength and / or weaknesses of internal control system and based on that review:
Perform compliance testing and determine the extent and timing of audit procedures applicable under the circumstances.
Prepare a memorandum or report the result of the work, conclusions and comments about the strength and / or internal control weaknesses that require immediate action taken or may be appropriate points for our letter of recommendation.
2. Plan and conduct substantive tests of the figures showing the financial statements, which are necessary under the circumstances.
EVIDENCE OF COMPLIANCE
A. Verify the existence and implementation of a policy of access to investments.
B. To determine the efficiency of the investment policy of purchasing the company
C. Verify that the account holders registered as investment, are in order and according to the laws.
D. Observe the crediting of accounts of investments are recorded properly.
E. Check that there is a complete analysis of investment management to identify gaps and implement the necessary corrections
F. Check for information on the investments of the company is properly updated and made timely travel to the administration and managers within the company.
G. Verify the existence of a manual of personnel functions of the investment accounts.
H. Check the manual knowledge and compliance functions by employees.
SUBSTANTIVE TESTS
A. Check the physical existence of securities evidencing title to investments.
B. Ensure proper accounting and valuation of investments in accordance with generally accepted accounting principles applied on a consistent basis in relation to the previous period.
C. Check the appropriate financial statement presentation and disclose any encumbrances exist on such investments.
D. Check the way they were counted or lost products from investments and their inclusion in the states of the period.
E. By confirmations to verify the balances of investments to keep the company in other entities.
F. Check the settings on investment for the development of these on the market.
G. To determine the dividend policy that valuations in the market require it.
AUDIT PROCEDURES
1. Verify the authorization and ownership through the technique of inquiry that investments have been duly authorized by the financial manager.
2. Obtain written verification of the entities involved in the respective investments.
3. Perform an analytical review of financial statements to confirm that all investments are contained in them.
4. Check if the basis of assessment is applied consistently, in accordance with the policy approved by the board of directors
5. Through reprocessing technology to verify that transactions are recorded properly.
6. Ratify the basic assertion evaluation through the technique of recomputed.
7. To evaluate the court documents to determine if the investments are valued correctly.
8. Check that all movements on investments are reflected in financial statements.
9. Verify that the interest, dividends and others which led investments are recorded clearly and in accordance with GAAP
10. If any investment has been sold, verify that the price of that transaction has been approved by the Board of Directors
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