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SOX 404 Top–down Risk Assessment
In financial auditing of public companies in the United States, SOX 404 top–down risk assessment (TDRA) is a financial risk assessment performed to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404). Under SOX 404, management must test its internal controls; a TDRA is used to determine the scope of such testing. It is also used by the external auditor to issue a formal opinion on the company's internal controls. However, as a result of the passage of Auditing Standard No. 5, which the SEC has since approved, external auditors are no longer required to provide an opinion on management's assessment of its own internal controls. Detailed guidance about performing the TDRA is included with PCAOB Auditing Standard No. 5 (Release 2007-005 "An audit of internal control over financial reporting that is integrated with an audit of financial statements") and the SEC's interpretive guidance (Release 33-8810/34-55929) "Management's Report on Internal Control Over Financ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Audit
A financial audit is conducted to provide an opinion whether " financial statements" (the information is verified to the extent of reasonable assurance granted) are stated in accordance with specified criteria. Normally, the criteria are international accounting standards, although auditors may conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organization. In providing an opinion whether financial statements are fairly stated in accordance with accounting standards, the auditor gathers evidence to determine whether the statements contain material errors or other misstatements.Arens, Elder, Beasley; Auditing and Assurance Services; 14th Edition; Prentice Hall; 2012 Overview The audit opinion is intended to provide reasonable assurance, but not absolute assurance, that the financial statements are presented fairly, in all material respects, and/or give a true and fair view in accordance with the financial re ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Committee Of Sponsoring Organizations Of The Treadway Commission
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is an organization that develops guidelines for businesses to evaluate internal controls, risk management, and fraud deterrence. In 1992 (and subsequently re-released in 2013), COSO published the ''Internal Control - Integrated Framework,'' commonly used by businesses in the United States to design, implement, and conduct systems of internal control over financial reporting and assessing their effectiveness. History In 1985, COSO began as a private sector initiative to investigate the causal factors that lead to fraudulent financial reporting as a result of a number of accounting scandals in the 1970s and mid-1980s. This initiative was termed the National Commission on Fraudulent Financial Reporting; the first president of the Commission was James C. Treadway, Jr., a former Commissioner of the US Securities and Exchange Commission, and therefore the initiative was commonly called the "Treadway Commission". ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Internal Auditing
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Internal auditing might achieve this goal by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. The scope of internal auditing within an organization may be broad and may involve topics such as an organization's governance, risk management and management controls over: efficiency/effectiveness of operations (includi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Test Strategy
: ''Compare with Test plan'' A test strategy is an outline that describes the testing approach of the software development cycle. The purpose of a test strategy is to provide a rational deduction from organizational, high-level objectives to actual test activities to meet those objectives from a quality assurance perspective. The creation and documentation of a test strategy should be done in a systematic way to ensure that all objectives are fully covered and understood by all stakeholders. It should also frequently be reviewed, challenged and updated as the organization and the product evolve over time. Furthermore, a test strategy should also aim to align different stakeholders of quality assurance in terms of terminology, test and integration levels, roles and responsibilities, traceability, planning of resources, etc. Test strategies describe how the product risks of the stakeholders are mitigated at the test-level, which types of testing are to be performed, and which entry a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Evidence Sufficiency Diagram
Evidence for a proposition is what supports this proposition. It is usually understood as an indication that the supported proposition is true. What role evidence plays and how it is conceived varies from field to field. In epistemology, evidence is what justifies beliefs or what makes it rational to hold a certain doxastic attitude. For example, a perceptual experience of a tree may act as evidence that justifies the belief that there is a tree. In this role, evidence is usually understood as a private mental state. Important topics in this field include the questions of what the nature of these mental states is, for example, whether they have to be propositional, and whether misleading mental states can still qualify as evidence. In phenomenology, evidence is understood in a similar sense. Here, however, it is limited to intuitive knowledge that provides immediate access to truth and is therefore indubitable. In this role, it is supposed to provide ultimate justifications ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mitigating Control (financial Auditing)
A mitigating control is type of control used in auditing to discover and prevent mistakes that may lead to uncorrected and/or unrecorded misstatements that would generally be related to control deficiencies. For example, a Company's financial accounting may fail to record a financial transaction A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment. Any transaction involves a change in the status of the finances of two or more businesses or individuals. ... and the error may go unnoticed for several reporting periods. A mitigating control would be instrumental in finding and therefore, preventing such mistakes. If a key control fails and a mitigating control is in place, it may prevent the resulting potential financial statement error from becoming material. References {{Reflist Auditing terms ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Entity-level Controls
Entity-level controls are controls that help to ensure that management directives pertaining to the entire entity are carried out. They are the second level of a to understanding the risks of an organization. Generally, entity refers to the entire company. Regulation surrounding entity-level controls Sarbanes-Oxley Act of 2002 As a result of several accounting and auditing scandals, congress passed the Sarbanes-Oxley Act of 2002. Section 404 of the act requires company management to assess and report on the effectiveness of the company's internal control. It also requires the company's independent auditor to attest to management's disclosures regarding the effectiveness of internal control. The act also created the Public Company Accounting Oversight Board (PCAOB). PCAOB Auditing Standard 2201 The Public Company Accounting Oversight Board (PCAOB) became the primary regulator of audits of publicly traded companies. In June 2007, the PCAOB adopted Auditing Standard 2201 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Internal Control
Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization. It is a means by which an organization's resources are directed, monitored, and measured. It plays an important role in detecting and preventing fraud and protecting the organization's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks). At the organizational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations. At the specific transaction level, internal controls refers to the actions taken to achieve a specific objective (e.g., ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Compliance Cost
Compliance costs are all expenses that a company uses up to adhere to government regulations. Compliance costs incorporate salaries of employees in compliance, time and funds spend on announcing, new system necessitated to meet retention, and so on. Compliance costs happen to be as results of local, national or even international regulation (for instance MiFID II or GDPR applying to countries in European Union). Global firms operating all over the world with varying new regulations in each country tend to face significantly larger compliance costs than those functionating solely in one region. Example – people registered for value added tax (shortly VAT) have to keep records of all tax (input and output) to simplify the completion of returns. They need to employ someone skilled in this domain, which is regarded as compliance cost. Compliance cost mostly includes following: *The cost to assemble and issue reports *Cost of creating and maintenance of the system needed to collect fac ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Public Company
A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange ( listed company), which facilitates the trade of shares, or not ( unlisted public company). In some jurisdictions, public companies over a certain size must be listed on an exchange. In most cases, public companies are ''private'' enterprises in the ''private'' sector, and "public" emphasizes their reporting and trading on the public markets. Public companies are formed within the legal systems of particular states, and therefore have associations and formal designations which are distinct and separate in the polity in which they reside. In the United States, for example, a public company is usually a type of corporation (though a corporation need not be a public company), in the United Kingdom it is usually a public limited company (plc), ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
