Internal Control Deficiencies and Other Matters: Adding Value Through Required Auditor Communications

Learning Objectives

• To discuss what, when, and to whom to communicate identified deficiencies in internal control during the financial statement audit.
• To analyze how to categorize the severity of identified deficiencies.
• To explain how to draft written communications in a way that will increase the likelihood of corrective action.
• To discuss the importance of making value-added business advice to clients a priority.
• To explain how to anticipate and prevent issues that could negatively impact clients.

Course Description

In an audit of financial statements, the auditor may identify deficiencies in the company's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

A deficiency in design exists when a control necessary to meet the control objective is missing or an existing control is not properly designed so that, even if the control operates as designed, the control objective is not always met. A deficiency in operation exists when a properly designed control does not operate as designed or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.

Professional and regulatory audit standards require communication of internal control matters noted in a financial statement audit. This assists management and those charged with governance with satisfying responsibilities for designing, implementing, maintaining, and monitoring internal controls. 

This CPE course will help the auditor with understanding how to improve required internal control communications to be more value-added from the perspective of the client.

Major Topics Covered in this CPE Auditing Webinar:

• SAS Requirements for Communication.
• Evaluating the severity of identified deficiencies, including consideration of qualitative considerations
• Who, How, and When to Communicate
• Elements of a Communicated Deficiency
• Elements of Written Communication
• Focus on Being Value-Added in Communications
• Putting the Client at the Center of the Table
• Communicating from the Client’s Perspective
• Better Writing Tips

Overview

• SAS requirements for communication

  3 mins
• Example significant deficiencies vs. Material weakness

  16 mins
• Factors impacting likelihood

  30 mins
• Management is responsible for remediation

  46 mins
• Overlapping internal control objectives

  68 mins
• Embrace your inner tweet

  96 mins