Understanding the Entity, Including its System of Internal Control

If you fail to understand the entity, including its system of internal control, your audit is doomed from the start. And, based on peer reviews, nearly half of the audits performed are nonconforming because the auditors did not properly address their clients’ controls (that’s a polite way of saying they messed up)! This internal controls CPE eLearning course (1.5 CPE) explores the required risk assessment procedures necessary to obtain an understanding of the entity and its environment. This includes its system of internal control.

Firstly, we’ll walk through the 2013 COSO framework and the five components of internal control. This includes the principles representing the fundamental concepts associated with each component. Finally, you’ll learn how to identify relevant (or key) controls. That includes why they are important, and what the auditing standards require you to do with them.

This internal controls CPE course is based on the revised guidance within SAS 145, Understanding the Entity and Its Environment and Assessing the Risk of Material Misstatement. This guidance is now codified in AU-C section 315 of the same title. Topics covered include:

Risk assessment procedures

• Understanding the entity
• System of internal control
• Identified controls

If you audit financial statements in accordance with Public Company Accounting Oversight Board (PCAOB) auditing standards, U.S. generally accepted auditing standards (U.S. GAAS), or International Standards of Auditing (ISAs), this course, part of the Internal Control: The Essentials course collection, is an absolute must.

Interested in group discounts for your team or firm? Contact us to learn more.

 By the end of this course, you should be able to: 

• Recall the required risk assessment procedures and what we hope to learn from performing them
• Identify the components within an entity’s system of internal control
• Identify relevant controls that address the risks of material misstatement