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CHAPTER 14

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ann santos

on 5 September 2013

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Transcript of CHAPTER 14

CHAPTER 14
COMMUNICATING ASSURANCE ENGAGEMENT OUTCOMES AND PERFORMING FOLLOW-UP PROCEDURES

Develop Final Engagement Communications
Rating Systems
The assignation of a numeric or descriptive appraisal of engagement results for the purpose of comparing or trending them with other engagement results
Distribute Formal and Informal Final Communication
Practice Advisory 2410-1: "observations are pertinent statements of fact. The internal auditor communicates those observations necessary to support or prevent misunderstanding ..."
Quality of Communication
* Accurate
* Objective
* Clear
* Concise
* Constructive
* Complete
* Timely
Perform Monitoring and Follow-up
The CAE is instructed by the Standards to "establish a follow-up process to monitor and ensure that management actions have been effectively implemented or that senior management has accepted the risk of not taking action."
Final assurance engagement communications ensure the internal audit function fulfills the following obligations:
* Communicate timely, pertinent information to management concerning deficiencies in controls, strengths in control, opportunities to maximize resource utilization or reduce costs, and areas for increased productivity or efficiency
* Document the scope, conclusion, observation, recommendations, and resulting management action plan of an engagement
* Become a part of the permanent record of the work performed during an engagement and the results of an engagement
a well designed final communication should include:
* Purpose and scope of engagement
SCOPE - what is or is not included within an engagement
* Time frame covered by the engagement
* Observation as required by the evaluation and escalation process and recommendation
* Engagement conclusions and rating
CONCLUSION - the internal audit function's assessment of the design adequacy and operating effectiveness of the controls subject to audit
* Management's action plan to appropriately address reported observation
Difference between an assurance engagement and consulting engagement
Assurance engagement:

three parties involved
* auditee
* internal audit function
* user
Consulting engagement:

two parties involved
* customer
* internal audit function
Positive Assurance
"Positive assurance (reasonable assurance) provides the highest level of assurance and one of the strongest types of audit opinions"
Negative Assurance
A rating or conclusion indicating that nothing negative has come to the internal auditor's attention
A rating or conclusion by the internal auditor that provides specific assurances about engagement
Informal
Informal Communication
communication regarding insignificant observations related to secondary controls that might be compromised
Assurance engagement communications are formal or informal depending on the outcome
FORMAL
senior management, the audit committee, the organization's independent outside auditor, and/or auditee management
assessed to be:
* Insignificantly compromised, although key controls are affected
* significantly compromised
* materially compromised
formal communication should include:
* the purpose and scope of the audit
the observations and recommendations (results) of the audit, if any
* the conclusion, (opinion and/or rating) of the internal audit function
* management's response (action plan) to the recommendation
Error and Omissions
"If a final communication contains a significant error or omission, the chief audit executive must communicate corrected information to all parties who received the communication."
ERROR
An unintentional misstatement or omission by the internal audit function of significant information in the final engagement communication
THANK YOU!! :)
Lourence Joy Abel
Erica Jane Afable
Charles Dane
Shiela Marie Fernando
Marcus Guevarra
Ann Clarice Santos
Angelene Sarile
Full transcript