Auditing Internal Controls: ACC30010 Presentation - University Name

This PowerPoint presentation, prepared for an auditing course, delves into the critical role of internal controls in the audit process. It begins with an introduction to auditing and its objective of providing a fair view of financial statements. The presentation then explores internal controls, their relationship with financial reporting, and how they are assessed during audit planning. It details various audit tests of internal controls, including enquiry, confirmation, inspection, observation, and re-performance. The presentation uses the example of ABC Company to illustrate the practical application of these controls, highlighting the examination of purchase requisitions and supplier payments. Finally, the presentation emphasizes the significance of internal controls in ensuring the accuracy of financial statements and mentions different types of audit controls used to achieve this goal, referencing relevant academic literature.

Auditing
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

Introduction:
• Audit is an objective investigation and
analysis of the financial statements of an
organisation to represent fair view of the
statements
• Could be conducted internally by staffs of the
organisation or externally by an outside
organisation
• Focus would be kept on analysing the internal
test of control and the types of control

Internal controls:
• Type of audit examination on the internal
control of an organisation
• Audit internal controls have relationship
with internal control over financial reporting
• Quality of financial statements depends on
internal control
• Internal controls normally conducted
during audit planning; however, they could
be conducted at the stages of execution

Explanation of audit test of
internal controls:
• In Australia, the financial statement audit
follows the principles laid down in ISA 315
(ASA 315)
• Conduction of risk assessment in the
planning stage
• More focus on internal control than
financial reporting
• Understanding of internal control of the
clients during the stage of planning

Tests of Audit Controls:
• Enquiry and confirmation
• Inspection
• Observation
• Re-performance
• Re-calculation

Example of Test of Controls:
• Conduction of audit work of ABC Company
• Performance of audit planning and
approval from audit partner
• Documentation of many areas during
audit planning
• Consideration of main control in the
internal control of purchase
• Investigation of authority approving
material purchase, fixed assets and
inventories
• Examination of purchase requisition,
supplier payments and purchase order

Conclusion:
• Internal controls are found to be crucial
for auditing the financial statements of
business organisations.
• There are different types of audit control
including enquiry and confirmation,
observation, inspection, re-performance
and re-calculation
• These controls are analysed to be useful
for ensuring the accuracy of financial
statements

REFERENCES:
 Chen, Y., Smith, A.L., Cao, J. and Xia, W., 2014. Information technology
capability, internal control effectiveness, and audit fees and
delays. Journal of Information Systems, 28(2), pp.149-180.
 Doogar, R., Sivadasan, P. and Solomon, I., 2015. Audit fee residuals: Costs
or rents?. Review of Accounting Studies, 20(4), pp.1247-1286.
 Khlif, H. and Samaha, K., 2014. Internal Control Quality, E gyptian
Standards on Auditing and External Audit Delays: Evidence from the E
gyptian Stock Exchange. International Journal of Auditing, 18(2), pp.139-
154.
 Krishnan, J., Krishnan, J., and Song, H., 2016. PCAOB international
inspections and audit quality. The Accounting Review, 92(5), pp.143-166.
 Newton, N.J., Persellin, J.S., Wang, D. and Wilkins, M.S., 2015. Internal
control opinion shopping and audit market competition. The Accounting
Review, 91(2), pp.603-623.
 Tsipouridou, M. and Spathis, C., 2014, March. Audit opinion and earnings
management: Evidence from Greece. In Accounting Forum, 38(1), pp. 38-
54.