Question

Identify, read and summarize the Independent Auditors Report (s) and Management Report (letter) on Internal Financial Controls Why is this important and what do they say they do, how they do, and their responsibilities?

independent auditor and management report choose anything you want.

Answer 1

Dear sir/madam,

I choose management report on internal financial contols and explian my level best answer. :)

Management report on internal financial controls

Why is this internal financial controls important ?

• "Internal Financial Controls" are the policies and procedures adopted by company for smooth running of their financial part of business
• They ensure efficient and orderly conduct of business.
• They safegaurd companies assets, prevents detects and corrects the material mis-statements of frauds and errors
• They also ensures the timely preparation of financial statementscuracy and completeness of the accounting records, and timely preparation of reliable financial information.

Objectives of IFC :

• Operating efficiency and effectiveness
• Asset safegaurding
• Reliability of financial reporting
• Detection and prevention of errors and frauds
• Completeness and accuracy of accounting records

Simply saying,

Internal Control = Internal Control Over Financial Reporting + Operating Control Reporting + Fraud Prevention Reporting

What do they say they do ?

There is a high level responsibitly of management to say that the internal financial controls should be properly implemented and controlled.

They say they do the analysis regarding the design and implimentation of internal financial controls and the outcome should speak in such a way that they came to know that the controls are woking effectively and efficiently

How do they do ?

Management implement by:

• Assess the current state of internal controls
• Embrace a widely acceptable framework or guidelines
• Set the right tone at the top i.e. those charged with governance
• Ascertain organizational risks which have a financial impact
• Define the Control Objectives and Control Activities to mitigate the risk
• Ongoing continuous monitoring of the functioning of controls
• Obtain independent assurance on the effectiveness of the internal controls i.e. Independent Auditors

Responsibilities of management

Statue requires directors to report in directors resposibility statement regaarding IFC controls whether they are adequate and operating effectively.

Additional responsibilities include:

• Maintenance of appropriate accounting records in accordance with the provisions of the Act for the safeguarding of the Company's assets and for the prevention and detection of fraud and other irregularities
• Make reasonable and prudent judgements and estimates
• Selection and enforcement of applicable accounting policies
• And the development, operation and management of sufficient internal financial controls to insure that the reports are accurate and complete and to prepare and deliver the financial statements that give a true and reasonable perspective and which are free from material error, whether due to fraud or error

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