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Usefulness of Internal Controls

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Added on  2019-09-30

Usefulness of Internal Controls

   Added on 2019-09-30

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Running head: AUDITING AND ASSURANCEAUDITING ANDASSURANCE
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AUDITING AND ASSURANCE1Question (i).Usefulness of internal controls and information systems in identifying the control risks of thecompany.Internal control plays a major role in a company's success. The internal audit is needed for theexpansion and for controlling the risks of the company, for studying the importance we need tounderstand the need to analyze the extent of an internal control system which will be best suited forour business. We need to analyze the environment for controlling and for the assessment of risk, information andthe communication, monitoring and controlling the activities review.Internal control and information system is useful in identification of controlling risks through theinternal control practices and handling the electronic information and the technology appropriately.When the proper accountability exists you have to access to the electrical and the personalinformation for their privacy.Best practices to follow these are:Limit the system of business and the data access to the appropriate users Put some privacy policies or security on the emails, Web browsing and on the electroniccommunication Determining the approval hierarchies and appointing a departmental security administrator(DSA)Implementation of the security measures for protecting the access to electronic resources andthe private information according to standards of IS-3 and PPM 135-3Accessing and securing by communicating and coordinating with the IT services. Training the employees in accessing the computer, by securing the data and using theappropriate use of information.Addressing the suspected access and the security violation according to CIRT process.
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AUDITING AND ASSURANCE2Consequences that can occur if accountability does not exist:Misusing of the information Identifying the threat Improper use of university assetsDamaging the image of the publicLegal actions can be taken Reconciliation confirms that the transaction are being correctly recorded. The best practices used forreconciliation by ensuring the data integrity by the validation of data with a data warehouse or thefinancial link tools or the reporting models.Follow the retention schedule and the data retention requirementsPeriodically reviewing the information that is being stored in the electronic or paper format.If the review and reconciliation is not performed the consequences occurred are the errors,discrepancies or the irregularities are undetected Inaccurate and incomplete official recordsImproper accessing to the business system and data.(Knechel, W. R.,2016)(ii.) Role of an external Auditor as an Assurance Provider An external auditor performs an audit as per the specified laws made by in the company’s Act1981 and as per the amendment act of 2013 they use to analyze the financial statements of thecompanies, firms, government entities, other entities, organizations.The example of the actualcompany charged with accounting fraud is FREDDIE MAC SCANDAL(2003) in which the earning 5million dollars was misstated.For settling down their case they have paid 50 million dollars to settletheir misstatement fraud of earnings. The role of the external auditors was to identify the annualaccounts that has been audited by the internal auditors and the financial report framework is to be
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