Checklist For Evaluating Internal Controls in Business Management

For publicly traded companies, the Sarbanes-Oxley Act of 2002 requires an audit of internal controls. The purpose of an internal control evaluation is to evaluate risk, which offers auditors a basis for audit planning and provides useful information to management ("Sox Law", 2006). Auditors typically use the five basic components of internal control to approve the entire system. According to Louwers, Ramsay, Sinason, and Strawser (2007) the five components to internal controls include control environment, risk assessment, control activities, monitoring, and information and communication.

Control environment involves the tone of the organization and includes “the integrity, ethical values, and competence of the company's people” (Louwers, Ramsay, Sinason, & Strawser, 2007). Risk assessment involves a thorough assessment which “identify(s) risks, estimate their significance and likelihood, and consider how to manage the risks” (Louwers, Ramsay, Sinason, & Strawser, 2007).

Control activities involve specific actions which help ensure that management’s goals and projections are met. Monitoring involves the continuous assessment of internal controls. Information and communication relates to the efficiency and reliability of information and communication regarding how the information is presented and communicated to users.

Get quality help now
writer-marian
writer-marian
checked Verified writer

Proficient in: Business

star star star star 4.8 (309)

“ Writer-marian did a very good job with my paper, she got straight to the point, she made it clear and organized ”

avatar avatar avatar
+84 relevant experts are online
Hire writer

Internal controls protect the financial information and operations of a business. The development and implementation of these controls are typically the responsibility of the business owners. Internal or external audits may be used to gauge the efficiency of internal controls. This audit generally takes place following a standard process of risk measurement regarding the business operations and financial information. The measurement data is most effectively determined by using an internal control checklist.

Get to Know The Price Estimate For Your Paper
Topic
Number of pages
Email Invalid email

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy. We’ll occasionally send you promo and account related email

"You must agree to out terms of services and privacy policy"
Write my paper

You won’t be charged yet!

Checklist

Phase One

  • Understand and Document the Client’s Internal Control Obtaining an Understanding
  • Control Environment Evaluation
  • Risk Assessment Evaluation
  • Information and Communication Assessment

Phase Two

Assess the Control Risk

Phase Three

  • Test Controls and Review Control Risk
  • Reassess Controls
  • Direction of the Test of Controls
  • Reassess the Control Risk
Updated: Jul 07, 2022
Cite this page

Checklist For Evaluating Internal Controls in Business Management. (2016, Sep 13). Retrieved from https://studymoose.com/checklist-for-evaluating-internal-controls-essay

Checklist For Evaluating Internal Controls in Business Management essay
Live chat  with support 24/7

👋 Hi! I’m your smart assistant Amy!

Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.

get help with your assignment