Internal Controls the Generalized Lack Essay

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This implies a comparison of the results of the internal and external audits. Additionally, aside results and documents consulted, it is also necessary to assess the various variables used in the evaluations.

It is for instance possible for the company to alter the findings by focusing on more favorable variables. As a specific example, a financial audit could reveal increased organizational abilities to honor company debts, but this conclusion could solely be founded on the assessment of the company's short-term liquidity, in a context in which the assessment of the long-term liquidity would have revealed financial instabilities. In this order of ideas, the risks of altered results would decrease and the relevance of the findings would increase to better allow the auditor to assess the quality of the internal control systems.

At this stage, the auditors would make use of several technological applications through which to increase the efficiency of the data analysis process. In terms of the financial assessments for instance, they could implement the several AXS-One systems for the analysis of the general ledger, through which they would assess the correctness of the balance entries, the inter-company accounts, the amounts of money used in the consolidation of other subsidiaries or several other financial aspects (AXS-One, 2003).

Particular elements which should be assessed at this stage of the assessment include:

The levels of organizational integrity and ethics

The organizational commitment to competence

The structure of the company and the control processes at each organizational level

The assignment of authority and responsibility

The practices regarding accounting, human resources and other organizational processes (the University of Utah).

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Phase 3: Testing

Finally, in the third stage of the control process, it is necessary that tests be conducted on the efficiency of the control mechanisms. Specifically, the following questions should be answered:

Do all the tests conducted respect the pre-established organizational requirements and legislative stipulations?

In terms of organizational compliance with the above mentioned requirements and stipulations, is the degree of compliance adequate?

Do the control systems break into specific sub-task control operations which test particular operations, functions, risks and so on?

Upon termination of the control processes, do the internal auditors collect and adequately report information?

Are the control reports adequately integrated within the organizational context to offer lessons for the future?

Are the results of control processes used to improve the future audit operations (Phases of a Control Evaluation PowerPoint)?

As a final specification, it is important to note that the above checklist for internal control has been created based on the available literature and that it is as such a general theoretical suggestion for the elements to be integrated in a control process. Given however that each economic agent has diverse needs and is characterized by diverse features, it would be advisable for the checklist to be adjusted to the unique needs and characteristics of the respective entity......

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