Authoring Internal Control Narratives

							Authoring Internal Control
       Narratives




        Presented by
        Paul E. Glick
   Glick Consulting Group
         The Risk Assessment
                 Suite
● SAS 107 – Audit Risk and Materiality
 in Conducting an Audit

● SAS 108 – Planning and Supervision
        The Risk Assessment
                Suite
● SAS 109 – Understanding the Entity
 and its Environment and Assessing
 the Risks of Material Misstatement

● SAS 110 – Performing Audit
 Procedures in Response to
 Assessed Risk and Evaluating the
 Audit Evidence Obtained
       What Some Auditors Are
               Doing

● Identify the Control Objective:

  ● Ensures That Payments For Goods And
    Services Are Properly Authorized
      What Some Auditors Are
              Doing

● Identify the Key Controls:


  ● Each Invoice Is Signed By An
    Authorized Employee And Validated By
    The Accounts Payable Staff
      What Some Auditors Are
              Doing
● Assertions:


  ● E/O – Existence or
  ● R/O – Rights or Obligations
  ● V – Valuation or Allocation
  ● A/CL – Accuracy or Classifications
  ● CO - Cutoff
      What Some Auditors Are
              Doing
● Auditor Walk-through


● Test Operating Effectiveness


● Control Risk Conclusion
           Narratives – Areas to
                 Address

●   Capital Assets
●   Annual Operating Budget
●   Investments
●   Long-term Debt
●   Grants
         Narratives – Areas to
               Address
● Accounts Payable, Expenditures
  (Excluding Payroll) and Cash
  Disbursements
● Payroll
● Cash Balances, Receipts, Accounts
  Receivable and Revenues
● Financial Statement Preparation
  Year-end Closeout Process
           Narrative Contents

● Overall Objectives

● Background

● Process Cycles

● Summary of Control Objectives and
 Key Controls
            Let’s Review Some
                 Narratives

●   Capital Assets
●   Annual Operating Budget
●   Investments
●   Long-term Debt
●   Grants
          Let’s Review Some
               Narratives
● Accounts Payable, Expenditures
  (Excluding Payroll) and Cash
  Disbursements
● Payroll
● Cash Balances, Receipts, Accounts
  Receivable and Revenues
● Financial Statement Preparation
  Year-end Closeout Process
         WE ARE FINISHED!

 ANY QUESTIONS, FEEL FREE TO
  EMAIL ME:
        pglick@mindspring.com

 OR CALL ME @ 352/875-7449




GCG             131