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1、外文翻译-财务报告的内部控制 本科毕业论文设计外 文 翻 译外文题目 Auditing Internal Control Over Financial Reporting外文出处 Auditing Internal Control Over Financial Reporting University of Hawaii at Hilo 2004 12 100-107 外文作者 James E Hunton 原文 Public Company Accounting Oversight Board PCAOB Auditing Standard No 2 AnAudit of Internal
2、Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements AS-2 addresses the work that is required to audit internal control over financial reporting and the relationship of that audit to the audit of the financial statementsSince the issuance of AS-2 auditors a
3、nd other parties have raised questions on a variety of issues about the implications of AS-2 To answer those questions on June 23 2004 the Office of the Chief Auditor of the PCAOB issued guidance in the form of questions and answers on issues related to the implementation of AS-2 Refer to the Septem
4、ber 30 2004 and October 15 2004 GAAS Update Service issues for coverage of the topics previously addressed by the PCAOB staff in its June release which relate to the following areas auditor independencescope and extent of testing evaluating deficiencies multi-location issues using work of othersand
5、service organizations In response to additional implementation questions that continue to be raised on October 6 2004 the PCAOB staff updated its June release Auditing Internal Control Over Financial Reporting on frequently asked questions The updated PCAOB release issued in October 2004 provides ad
6、ditional interpretive and implementation guidance on issues relating to scope and extent of testing evaluating deficiencies and service organizations PCAOB staff questions and answers represent the staffs opinions on issues related to the implementation of the standards of the PCAOB They are intende
7、d to provide guidance to auditors on implementing the PCAOBs standards However they are neither rules of the PCAOB nor have they been approved by the PCAOB Scope and Extent of TestingQ Does the scope of internal control over financial reporting as it relates to compliance with laws and regulations u
8、nder AS-2 encompass controls over a broader array of circumstances than those described in AU Section 317 Illegal Acts by Clients A Yes AU Section 317 Illegal Acts by Clients provides that the auditor consider the laws and regulations that have a direct and material effect on the determination of fi
9、nancial statement amounts However paragraph 15 of AS-2 does not use the phrase direct and material effect on the determination of financial statement amounts Rather paragraph 15 of AS-2 provides that operations and compliance with laws and regulations directly related to the presentation of and requ
10、ired disclosures in financial statements are encompassed in internal control over financial reporting This provision in AS-2 includes 1 the direct and material effects described in AU Section 317 such as compliance with tax laws that affect accruals and the amount recognized as expense in the accoun
11、ting period and 2 other circumstances that would be classified under AU Section 317 as having only indirect effects on the financial statements In the PCAOB staffs view internal control over financial reporting encompasses controls over the identification measurement and reporting of all material ac
12、tual loss events that have occurred including controls over the monitoring and risk assessment of areas in which such actual loss events are reasonably possible The staff guidance illustrates this point by indicating that for example a waste disposal companys internal control over financial reportin
13、g ordinarily would encompass controls for identifying and measuring environmental liabilities for existing and newly acquired landfills even if there is no governmental investigation or enforcement proceeding underway The PCAOB staff believes that its interpretation is consistent with the Securities
14、 and Exchange Commission SEC staffs views regarding managements responsibilities for assessing internal control over financial reporting According to the SEC staff while it may be possible to connect the violation of any law rule or regulation to the financial statements by observing that if the vio
15、lation is significant enough it will have a material effect on the registrants financial statements the SEC staff does not believe that compliance with all laws fits within the definition The SECs financial reporting requirements and the Internal Revenue Code are examples of regulations that are dir
16、ectly related to the preparation of the financial statements Conversely rules requiring disclosure as to the existence of a code of ethics or disclosure as to the existence of an audit committee financial expert are examples of rules promulgated under the Sarbanes-Oxley Act of 2002 SOA that are not
17、directly related to the preparation of financial statementsEvaluating Deficiencies What is the effect on the auditors evaluation of managements assessment of internal control and the auditors report in circumstances under which managements assessment and the auditors audit procedures do not include
18、certain controls that should have been encompassed because neither management nor the auditor has the ability to evaluate those controlsA There may be circumstances in which there are restrictions on the scope of the auditors engagement to audit internal control over financial reporting For example
19、both management and the auditor may be unable to obtain evidence of operating effectiveness of controls at a service organization used by the company because a type 2 Statement on Auditing Standards SAS No 70 Service Organizations SAS-70 report that is deemed to be necessary under the circumstances
20、is not available If neither management nor the auditor is able toperform tests of controls at the service organization eg because management does not have a contractual right to do so a scope limitation exists An SEC staff interpretation states that subject to limited exceptions management cannot is
21、sue a report on internal control with a scope limitation Under paragraph 20 of AS-2 in order for the auditor to satisfactorily complete an audit of internal control over financial reporting management must fulfill several responsibilities including evaluating the effectiveness of the companys intern
22、al control over financial reporting and supporting its evaluation with sufficient evidence Therefore if management is unable to assess certain controls over financial reporting that should have been included in its assessment a control deficiency exists If the transaction or events subject to contro
23、ls that management is unable to assess are material to the companys financial statements the auditor ordinarily would determine that this control deficiency represents a material weakness In additionthe auditor would need to determine whether management under the circumstances had failed to fulfill
24、its responsibilities to evaluate the effectiveness of the companys internal control over financial reporting and support its evaluation with sufficient evidence If the auditor determines that management has not fulfilled its responsibilities the auditor is required to disclaim an opinion Also to the
25、 extent that management has willfully decided not to fulfill its responsibilities the auditor may have additional responsibilities under AU Section 317 and under Section 10A of the Securities Exchange Act of 1934 In making the determination of whether management has fulfilled its responsibilities to
26、 evaluate the effectiveness of the companys internal control over financial reporting the PCAOB staff indicates that the auditor could evaluate factors such as the following The date of the contract or other transaction documents that could have provided management with the ability to assess control
27、s or otherwise to obtain evidence of the operating effectiveness of relevant controls The relative ease or difficulty with which management could renegotiate the contract or transaction documents and the extent to which management has attempted to do so and Whether management is able to assess the c
28、ontrols or obtain evidence of operating effectiveness of relevant controls in the absence of having access to the controls The PCAOB staff provides the following examples of how to apply the aforementioned guidance Inability to obtain evidence of the operating effectiveness of controls at the servic
29、e organizationWhen the transactions or events subject to the internal controls at the service organization are material to the companys financial statements and management is unable to obtain evidence about their operating effectiveness the auditor ordinarily would determine that a material weakness
30、 exists However for example if the servicing contract with the service organization was executed in 2001 ie well before the existence of the SOA and management already has negotiated with the service organization to provide a suitable type 2 SAS-70 report next year the auditor might determine that m
31、anagement had fulfilled its responsibilities under AS-2 Accordingly the auditor might be able to complete the audit of internal control over financial reporting On the other hand the auditor ordinarily would determine that management had not fulfilled its responsibilities under AS-2 in the following
32、 circumstances 1 if management recently renewed its contract with the service organization but did not negotiate either an agreement about obtaining a suitable type 2 SAS-70 report or permission to test controls at the service organization or 2 if the contract with the service organization is long-d
33、ated and management has not attempted to negotiate to obtain the necessary evidence of operating effectiveness of controls Accordingly in these circumstances the auditor would be required to disclaim an opinion and would need to evaluate his or her additional responsibilities under AU Section 317 an
34、d under Section 10A of the Securities Exchange Act of 1934 Consolidation of variable interest entities The SEC allows management to limit its assessment of internal control over financial reporting by excluding certain entities that are subject to consolidation under FASB Interpretation No 46 Consol
35、idation of Variable Interest Entitiesan Interpretation of ARB No 51 FIN-46 For example management is permitted to exclude from the scope of its assessment the controls of an entity in existence prior to December 15 2003 that is consolidated pursuant to FIN-46 for which the company does not have the
36、right or authority to assess the controls and also lacks the ability to make that assessment In such situations according to AS-2 the auditor may limit the audit of internal control over financial reporting in the same manner and report without reference to the scope limitation On the other hand if
37、management is unable to assess the controls of an entity consolidated pursuant to FIN-46 that came into existence subsequent to December 15 2003 the auditor would conclude that a control deficiency exists accordingly if the consolidated variable interest entity is material to the companys financial
38、statements the auditor ordinarily would conclude that this represents a material weakness in internal control over financial reporting Also the auditor needs to determine whether management has fulfilled its responsibilities as described in paragraph 20 of AS-2 If the auditor determines that managem
39、ent has not fulfilled its responsibilities the auditor is required to disclaim an opinion Also to the extent that management has willfully decided not to fulfill its responsibilities the auditor may have additional responsibilities under AU Section 317 and under Section 10A of the Securities Exchang
40、e Act of 1934 Service Organizations By virtue of the requirement in AS-2 for the auditor to perform at least one walkthrough for each major class of transactions if a service organizations services involve the processing of a major class of transactions should the auditor perform walkthroughs at the
41、 service organization AS-2 requires the auditor to perform at least one walkthrough for each major class of transactions In a walkthrough the auditor traces all types of company transactions and events 1 from origination 2 through the companys accounting information and financial reporting system an
42、d 3 to their inclusion and disclosure in the companys financial statements Because of the importance of walkthroughs and the fact that they accomplish several objectives AS-2 specifically requires the auditor to Perform walkthroughs in each annual audit of internal control over financial reporting P
43、erform the walkthroughs directly himself or herself ie the auditor is precluded from delegating the performance of walkthroughs to others eg to management or to the internal auditors and Perform at least one walkthrough for each major class of transactions If the processing of a major class of trans
44、actions involves the services of a service organization the PCAOB staff advises that auditors would not have to perform walkthroughs at the service organization as long as they were able to obtain sufficient evidence to achieve the objectives of the walkthrough by other means for example through a s
45、ervice auditors report In evaluating if the service auditors report provides evidence sufficient to achieve the objectives of a walkthrough the PCAOB guidance indicates that auditors should follow the directions in paragraphs B21 to B24 of AS-2 which indicate The auditor may obtain evidence about wh
46、ether controls that are relevant to managements assessment and the auditors opinion are operating effectively by performing procedures such as the following Performing tests of the user organizations controls over the activities of the service organization eg testing the user organizations independe
47、nt performance of selected items processed by the service organization or testing the user organizations reconciliation of output reports with source documents Performing tests of controls at the service organization Obtaining a service auditors report on controls placed in operation and tests of op
48、erating effectiveness or a report on the application of agreed-upon procedures that describes relevant tests of controls If a service auditors report on controls placed in operation and tests of operating effectiveness is available management and the auditor may evaluate whether this report provides
49、 sufficient evidence to support the assessment and opinion respectivelyIn evaluating whether such a service auditors report provides sufficient evidence management and the auditor should consider the following factors The time period covered by the tests of controls and its relation to the date of managements a
