Checklist for Evaluation

Checklist for Evaluating Internal Controls

ACC/544

Monday, November 24, 2014

Tracie Youngblood

Checklist for Evaluating Internal Controls

An audit of internal controls, assessed by management, is required for any publicly traded company to stay in compliance with the Sarbanes-Oxley Act of 2002. An evaluation of the internal control system is to determine control risk and permit auditors a foundation to devise a plan for the audit. It provides useful material so owners and their management can accomplish the control mission of the company. An internal control system is comprised of five basic components and three evaluation phases that assist auditors in validating the system entirely. The data are best quantified with the use of an internal control checklist (Louwers, Ramsey, Sinason, & Strawser, 2007).

Internal controls provide safeguards to protect the company’s financial information and business operations. Business owners have the responsibility to developing internal controls and implement them into their companies. Owners use internal or external audits to assess the efficiency of their internal controls. An evaluation follows a standard process, measuring the company’s financial information and business operations (Chron, 2009).

Management Interviews

Interviewing management gives auditors an understanding of how owners and managers think within an organization. Questions for the interviewing process include why the owner designed specific internal controls, the use of the controls, if managers are knowledgeable of the reason for the controls, and what measures are undergone to correct a violation of control if it occurs (Chron, 2009).

Employee Interviews

Employee interviews are an important part of the evaluation process. Interviewing employees helps auditors determine how well they are trained for their positions. It can give an indication of how well owners and management inform their employees on safeguarding importance of the...