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Control Self Assessment

Control Self Assessment. Controls. Preventive Detective Corrective. Internal Control. Early Definition:

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Control Self Assessment

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  1. Control Self Assessment

  2. Controls • Preventive • Detective • Corrective

  3. Internal Control • Early Definition: Internal Control comprises the plan of organization and all of the coordinate methods and measures adopted by a business to safeguard assets, check the accuracy and reliability of accounting data, promote operational efficiency and encourage adherence to prescribed managerial policy.

  4. Treadway Commission (COSO) Issued 1990 covered: • Internal control framework-Definition of internal control • Evaluation tools-documents and guidelines for reviewing controls • Guidance for reporting to External Parties • Executive Summary

  5. Components • Control Environment • Risk Assessment • Control Activities • Communication and Information • Monitoring

  6. Control Environment • Management • Culture • Ethics and Integrity • Commitment to competence • Organizational Structure • Management Philosophy And operating style

  7. Control Environment • Assignment of Authority and responsibility • HR Practices

  8. Risk Assessment • Objectives Operating Financial Reporting Compliance • Risk Identification Significance Likelihood and frequency Management

  9. Control Activity • Top Level Reviews • Activity Management • Information Processing • Physical Control • Performance Indicators • Segregation of duties

  10. Information and Communication • Information and Internal Control Content of reports Timeliness Currency Accuracy Accessibility

  11. Monitoring • Supervision • Audit

  12. Control Self Assessment To understand what control self-assessment is, it helps to know what it is used for. And once you know its purpose, it is even more helpful to learn how to apply the practices within your own organization.

  13. Control Self Assessment Control Self-Assessment (CSA) process that is, simply put, designed to measure the effectiveness of internal controls in order to meet business objectives.

  14. Definition CSA is a process through which internal control effectiveness is examined and assessed. The objective is to provide reasonable assurance that all business objectives will be met.  The responsibility for the process is shared among all employees in an organization. CSA is conducted within a structured environment in which the process is thoroughly documented and the process is repetitive as an incentive for continuous improvement.  

  15. Definition The CSA process allows management and/or work teams directly responsible for a business function to: · Participate in the assessment of internal control.· Evaluate risk. · Develop action plans to address identified weakness. · Assess the likelihood of achieving business objectives.

  16. Problems • 1) selection of the wrong people for CSA facilitation; (2) oversimplification of the planning process; (3) launching CSA implementation with a huge project; (4) lack of management support; and (5) narrowing the focus (and thereby limiting the potential) of CSA's effectiveness.

  17. Approaches The three primary CSA approaches are facilitated team meetings (also known as workshops), questionnaires, and management-produced analysis. Organizations often combine more than one approach to accommodate their self-assessment. Facilitated team meetings gather internal control information from work teams that may represent multiple levels within an organization. The facilitator(s) is trained in internal control system design as well as generic facilitation techniques. The questionnaire approach uses a survey instrument that offers opportunities for simple yes/no or have/have not responses. Process owners use the survey results to assess their control structure.

  18. Approaches Management-produced analysis is any approach that does not use a facilitated meeting or survey. Through this approach, management produces a staff study of the business process. The CSA specialist (who may be an internal auditor) combines the results of the study with information gathered from sources such as other managers and key personnel. By synthesizing this material, the CSA specialist develops an analysis that process owners can use in their CSA efforts.

  19. Controlled Based The control-based format focuses on how well the controls in place are actually working. This format may include making control design decisions outside the workshop. CSA specialists determine the objectives and control techniques, with significant input from upper management. This format produces an analysis of the gap between how controls are working and how management intended these controls to work. In addition, this format can be effective in examining soft controls such as management integrity.

  20. Processed Based The process-based format examines activities performed within selected processes. The intent of this workshop is to evaluate, update, and/or streamline selected processes. In addition to deciding the objectives to assess, specialists also determine which processes can best meet key business objectives before the facilitated meeting. The process-based format may have greater breadth of analysis than a control-based format, and can be used effectively in conjunction with reengineering efforts or quality action team initiatives.

  21. Risk Based The risk-based format focuses on identifying and managing risk. This format examines control activities to ensure they are sufficient to manage key business risks. This format easily identifies significant residual risks for corrective action, and may result in more global self-assessments than other methodologies.

  22. Objective Based The objective-based formatfocuses on the best way to accomplish an objective. The objectives may or may not be decided by specialists, but significant input from the work unit is essential. The intent of the workshop is to identify whether the best control techniques have been selected, and whether these techniques are working effectively and resulting in acceptable levels of residual risk.

  23. The Role of Auditors CSA effectively augments auditing. One of the primary responsibilities of the board and officers of any organization is providing stakeholder assurance through oversight of the organization’s activities. Auditing, by definition, assists members of the organization in the effective discharge of their responsibilities.

  24. Implementation • Scope • Impact on the organization • Use of the results • Process enhancements

  25. CSA Process • Useful to Management • Positive influence on the Control Environment • Improve controls over processes and assets

  26. Control Self Assessment Questions

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