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Auditing - Essay Example

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A company's management utilizes the internal control process to ascertain the accomplishment of these three objectives viz. effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations. Effectiveness and efficiency of operations refers to the achievement of basic business objectives and operational efficiency…
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Auditing
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Download file to see previous pages It means that the internal control process helps to ensure that the company's financial reporting i.e. the preparation of annual and interim financial statements along with the earning reports is done with utmost responsibility and integrity. Because the published financial statements go a long way in influencing the decisions of various stakeholders, it is the most crucial responsibility of internal control system to provide assurance with respect to the reliability of financial information. The third objective is to ensure that all the legal requirements as well as laws and regulations pertaining to the organization are met (Internal Control - Integrated Framework, retrieved 24.01.07).
It is one of the most important responsibilities of management to ensure the fair financial reporting under GAAP. This includes the company's balance sheet, income statement and the statement of cash flows with material considerations, as mentioned in Statement on Auditing Standards (SAS) 69. The Sarbanes Oxley Act (Section 302) also requires the company's management to ensure fair reporting of financial information in the financial statements (McEnroe, 2005). ...
The internal audit system of TPC should also meet the above mentioned objectives. The company's auditing objectives can be met with the help of a proper channel of communication which guides the audit team towards the accomplishment of these objectives. To gauge the extent to which the organization achieves these objectives, the internal control system should be combined with sufficient control tests. These tests can help TPC to check any possible deviations from the internal control system's operational, financial and regulatory objectives (Internal Control - Integrated Framework, retrieved 24.01.07). The internal auditor team should check the effectiveness and lacking of the internal control system on a regular basis so as to figure out any discrepancies and make corrections (Willis and Lightle, 2000).




Reference List
Internal Control - Integrated Framework. COSO: The Committee of Sponsoring Organizations of the Treadway Commission. Retrieved January 23, 2007 from the World Wide Web:http://www.coso.org/publications/executive_summary_integrated_framework.htm
Willis, D.M. and Lightle, S.S. (2000). Management Reports on Internal Controls. Journal of Accountancy. Retrieved January 23, 2007 from the World Wide Web:http://www.aicpa.org/pubs/jofa/oct2000/willis.htm
McEnroe, J.E. (April, 2005). Beyond GAAP: Issues Involving the Sarbanes-Oxley Certification Language, the CPA Journal, Retrieved January 26, 2007 from the World Wide
http://www.nysscpa.org/cpajournal/2005/405/perspectives/p18.htm
Weirich, T.R.., Arndt, T.L., Ciesielski, J.T. (Sept., 2005). Sarbanes-Oxley Act and Section 404: Basics on Internal Control Reports. The RMA Journal. Retrieved January 26, ...Download file to see next pagesRead More
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