Internal Control Weaknesses & Management Responsibilities

Audit: Internal Control Weaknesses and Management’s Responsibilities

Evaluating internal controls is one of internal auditing's primary responsibilities.  Internal auditing as an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It enables an organization to achieve its objectives by bringing a systematic, methodical approach to assess and improve the effectiveness of risk management, control, and governance processes. 

The internal audit activity evaluates the competence and efficiency of controls encompassing the organization's governance, operations, and information systems. Internal audit analyses the dependability and integrity of financial and operational information, effectiveness and proficiency of operations, safeguarding of financial assets, and compliance with all laws, regulations, and contracts. These assessments also determine the extent to which operating and programmatic goals and objectives have been recognized and follow to those of the organization, as well as demonstrate at what extent the results are consistent with set goals and objectives and if operations and programs are being executed or performed for their intended purpose. 

The control environment is influenced by the attitude of management and management's commitment to systems of control and other processes. Management's commitment to reliable financial reporting can be more thoroughly understood by obtaining an understanding of management's knowledge of the internal control systems and other processes operating in the business. As management is responsible for the entity's accounting and internal control systems and for the preparation of the financial statements, it is appropriate for us to inquire of management as to how it is discharging these responsibilities.

When gaining an understanding of management's commitment to design and maintenance of reliable accounting processes we consider the informed...