Auditing in a Corporate Environment with COSO Model of Internal Control & IDEA Software (Research Paper Sample)
Part 1 -2000 Words
Overview of main features
What is it about
Why has it been developed
Three specific examples of controls in a computerised environment.Break it down with element with COSO
200 words for each,600 words in total.
Impact of cybercrime on a business
Money financial loses
Customer details/financial details
600 words in total
Part2 IDEA Software - 1000 words
Outline-What does the software do?
What - Sorts data
How - Manipulates data to order it to make it easier to analyse.
Why - Easier to analyse
Quicker to discover errors(fraud)
Saves time-saves money
Finds records that have identical elements.
Knows the auditor to investigate the error.
Auditing in a Corporate Environment with COSO Model of Internal Control & IDEA Software
Client First Name & Surname
Conventional audit methods are failing to be greatly effective in unmasking the increased number of frauds despite enlarged consideration to internal controls and risk assessment. Financial forensics has acknowledged the necessity for pre-programmed mechanics to fraud analysis — though, until now, investigations have not scrutinized the advantages of forensic auditing as a means to identify and prevent corporate fraud. This paper intends to show how such a study is possible. The paper pens with an emphasis on the COSO Model of Internal Control which is gaining universal approval by accounting professionals. The second part highlights the efficiency of IDEA audit software as a tool to support the audit task, meet the regulatory objectives of the management, and to contest fraud. An additional sub-section has been dedicated to the cybercrime related issues. Thus, in short, this paper intends to discuss the application and effects of both COSO Model and IDEA audit software.
Keywords: Audit, Corporate Environment, COSO Model, Internal Control, IDEA Software
Auditing in a Corporate Environment with
COSO Model of Internal Control & IDEA Software
The year 1985 was the formation year of COSO, The Committee of Sponsoring Organizations. COSO was established with a specific agenda of delivering ‘thought leadership’ along the growth of widespread structure and directives on internal control and fraud prevention. COSO was designed to improve the performance of an organization and omission or diminish the level of organizational fraud. The Committee is an initiative together supported and financed by five private sectors:
• American Accounting Association (AAA)
• American Institute of Certified Public Accountants (AICPA)
• Financial Executives International (FEI)
• Institute of Management Accountants (IMA)
• The Institute of Internal Auditors (IIA)
CITATION COS13 \l 1033 (COSO, 2013)
COSO aims at lifting business capability by making every function productive CITATION Del131 \l 2057 (Deloitte, 2013). Such ‘structured’ guidance oriented control management system guarantees the progress of financial reporting paradigm in a business so that accounting, auditing and reporting become much more clear and trustworthy.
COSO Model: What does it mean?
As per COSO model the definition of ‘internal controls’ in a business is as follows:
“..... Internal control is .... a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in —
(1) the effectiveness and efficiency of operations
(2) the reliability of financial reporting and
(3) the compliance of applicable laws and regulations” CITATION COS13 \l 1033 (COSO, 2013)
According to the COSO Model, the organizational internal control system essentially uses five components: organize setting, risk evaluation, information and communication, control actions directing management’s instructions and supervision.
The Five Main Components of COSO model of Internal Controls
1 Supervision: Supervising activities consists of — continuous assessments and isolated assessments or a number of mix procedure of both to control company accounting and fiscal review. CITATION Kap12 \l 1033 (Kaplan Financial Knowledge Bank, 2012).
In general, supervision mainly combines two kinds of routes, namely, the continuous one and the other separate ones CITATION Kap12 \l 2057 (Kaplan Financial Knowledge Bank, 2012). While constant assessments offer on time data, separate periodic evaluations refer the efficiency of continuous assessments and prevailing managerial issues. A diverse level of monitoring is necessary for a data to get routinely tested and to avoid internal errors.
2 Information & Communication - To ensure internal control there should be smooth flow of information and zero encumbrance in data communication system. COSO model guarantees that data facts transmitted rightly to the concerned person on time. It also guarantees that the informed data is entirely appropriate to the specified undertaken duty to cope with time and to make other inter-organizational control support processes easier CITATION Kap12 \l 2057 (Kaplan Financial Knowledge Bank, 2012).
3 Preventive Tasks: Organizational directive instructions establish control activities or preventive tasks. Control activities usually intend at lowering of threats CITATION Kap12 \l 2057 (Kaplan Financial Knowledge Bank, 2012). These defensive activities are functional in all levels of dealing for detection of fraudulent activities and to prevent those activities in their nascent stage. However, automated defensive activities are not always completely equipped enough, which proves the necessity of human intervention in any control system. Though it is imperative to differentiate and allot duties according to preventive tasks, human intervention can change the task framework to a more realistic and fitting structure.
4 Risk Assessment: Each and every organization faces an array of threats from internal and external roots. Threat assessment relies on the anticipation of any unwanted incident and its harmful effects on the company directives. Risk assessment engages an aggressive and frequentative procedure for deciphering and measuring risks. Thus, threat evaluation configures the basic evaluation of the ways of threat handling system. Circulation of directives, functional at various stages of business, is the prerequisite to risk assessment. Threat evaluation operates and relies heavily on managerial objectives CITATION COS13 \l 2057 (COSO, 2013). Each managerial ...
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