Integrity and Ethical Values - The effectiveness of internal control policies and procedures is tied to the integrity and ethical values of the people who create, administer, and monitor them. Commitment to Competence - commitment to competence includes management's consideration of the competence levels for particular jobs and how those levels translate into requisite skills and knowledge. Given this evolution, auditors must guard against over-familiarity with a client and regularly reevaluate controls. Risk Assessment - the purpose of an entity's risk assessment is to identify, analyze, and manage risks that affect the entity's ability to accomplish its major objectives. This system should identify unexpected results and communicate them to management Monitoring - Monitoring involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.
Monitoring becomes increasingly important in larger organizations.
Understanding and Evaluating Accounting Information Systems Accounting information systems capture, record, summarize and report financial data and supporting information. Although each subsystem of an AIS functions within the overall control environment, each is unique and may vary in the strength of controls built into the application. The auditor is primarily interested in the accounting applications that produce transactions that may have a material effect on the financial statements. If specific controls are in place that the auditor believes are effective, the auditor may choose to determine the effectiveness of the control procedures. This is perhaps the most fundamental of all accounting controls.