Keywords comprehensive audit; Internal control audit; meaning
First of all, the questions raised
In May 2008, the Ministry of Finance, the China Securities Regulatory Commission, the National Audit Office, the China Banking Regulatory Commission and the China Insurance Regulatory Commission (five ministries and commissions) jointly issued the Basic Standards for Internal Control of Enterprises, which attracted attention from all walks of life. Also known as "China Sao Act", it came into effect on July 1 2009. On April 20 10, five ministries and commissions issued internal control application guidelines, evaluation guidelines and audit guidelines, which were implemented in stages: from 20 1 1, 1, and were implemented simultaneously in listed companies at home and abroad; Since 20 12, 10, 1, it has been implemented in companies listed on the main boards of Shanghai Stock Exchange and Shenzhen Stock Exchange; And choose the opportunity to implement it in small and medium-sized board and gem listed companies; Encourage unlisted large and medium-sized enterprises to implement in advance. In order to standardize the audit of internal control of financial reports by certified public accountants and improve the quality of practice, China Institute of Certified Public Accountants has formulated the Implementation Opinions on Auditing Standards for Internal Control of Enterprises, which will take effect on June 0, 20 12+ 1 year. The implementation of these laws and regulations shows that the internal control audit of enterprises in China has begun. Importance is a basic concept of audit, which is needed by certified public accountants when planning and implementing the audit of financial statements. The implementation of internal control audit urges certified public accountants to re-examine and think about the important concepts they are already familiar with in financial statement audit. How to correctly understand the importance of internal control audit has become a topic of concern for certified public accountants.
Secondly, the development of the concept of materiality in internal control auditing standards.
China's "Auditing Standards for Internal Control" clearly points out that certified public accountants should express audit opinions on whether an enterprise has maintained effective internal control in all major aspects. When planning the audit work, certified public accountants should evaluate the impact of factors related to determining major defects in internal control, such as importance and risk, on the audit work. Whether testing enterprise-level control or business-level control, certified public accountants should grasp the principle of materiality. It can be seen that the concept of materiality has been given a new content in the internal control audit. It is no longer a major misstatement in the financial statement audit, but a major defect in the internal control. Internal control defects are divided into major defects, important defects and general defects according to their influence. A major defect refers to the combination of one or more control defects, which may cause the enterprise to seriously deviate from the control objectives. Signs indicating that there may be major defects in internal control include: certified public accountants find that directors, supervisors and senior managers are cheating; The enterprise corrects the published financial statements; The certified public accountant found that there was a material misstatement in the current financial statements, but the internal control failed to find the misstatement during the operation; The supervision of internal control by enterprise audit committee and internal audit institution is invalid. A certified public accountant shall communicate with the board of directors and managers in writing about major defects. In addition, if a certified public accountant regards the internal control defects of non-financial reports as major defects, he should add a description part of the major internal control defects of non-financial reports to the internal control audit report, disclose the nature of major defects and their impact on the realization of relevant control objectives, and remind users of internal control audit reports to pay attention to related risks.
American Saao Act (SOX) requires listed companies to establish key control procedures, which has aroused new concern about the concept of materiality. SOX requires managers of listed companies to discover and prevent important control weaknesses in time. When the manager finds that the key control does not meet the minimum quality standards, he must take this result as an exception to the key control. Certified public accountants need to be able to identify key control exceptions and use materiality to determine their financial impact. In August of 20 10, the American Accounting Oversight Committee for Listed Companies (American Public Company Accounting Oversight Committee) adopted eight new auditing standards, which took effect in the audits of 20 10, 12 and subsequent financial periods. Daniel Gauze, Acting Chairman of the Accounting Oversight Committee of American Public Companies, said: "The introduction of these new standards means an important step in promoting accurate audit risk assessment and minimizing the risk that auditors fail to find material misstatements. It is very important to identify risks and deal with them through correct audit plans and activities to enhance investors' confidence in audited financial statements. "Among them, Auditing Standards No.65438 +0 1-Consideration of Importance in Planning and Implementing Auditing expounds the responsibility of auditors to consider importance in planning and implementing auditing, and re-emphasizes the contents pointed out in Auditing Standards No.5-Combination of Internal Control Auditing of Financial Reports and Auditing of Financial Statements issued by the Accounting Oversight Committee of American Public Companies in 2007. That is, auditors should consider the importance when planning the internal control audit of financial reports, which is different from Auditing Standards No.5-Combination of Internal Control Audit of Financial Reports and Audit of Financial Statements issued in 2007.
Thirdly, the application of materiality concept in internal control audit practice.
It can be seen that both Chinese and American auditing standards pay full attention to the provisions of importance. Compared with the development of internal control audit in the United States, China's internal control audit business has just started, and its importance is an important factor for auditors to guide the work direction of the project team according to their own professional judgment. Therefore, it is very important to learn from foreign experience, deepen the understanding of importance, and then correctly apply the concept of importance in practice. The author believes that we should pay attention to the following contents:
(a) The importance determined under the comprehensive audit framework is the same.
There are many connections between internal control audit and financial report audit: the ultimate goal is to improve the quality of financial information; They all adopt the risk-oriented audit mode, that is, first implement the risk assessment procedure to identify and evaluate the risk of major defects (or misstatements), and then take targeted measures to implement the corresponding audit procedure; Understand and test internal control; It is necessary to identify key audit areas, such as key accounts and important transaction categories. In the audit of financial reports, certified public accountants evaluate whether there are significant misstatements in key accounts and important transaction categories, while in the audit of internal control, certified public accountants need to evaluate whether these accounts and transactions are covered by internal control. However, due to the same audit object and judgment standard, they have the same level of importance in the audit under the integrated audit framework.
(b) Correctly identify key control deviations from two aspects: control design and operation effect.
Critical control deviation (defect) is usually the result of internal control design defect or operation failure. Certified public accountants should pay attention to two considerations when identifying key control deviations (defects): First, the lack of internal control design. When managers fail to establish enough internal controls to achieve control objectives, the design will fail. At the same time, it should also be emphasized that whenever key controls fail, managers must use effective compensatory controls to prevent potential financial statement errors from becoming major misstatements. Therefore, in the whole internal control plan of the company, appropriate compensatory control should be designed. Second, the internal control operation failed. When the proper control of the design is not effectively operated, it will lead to operation failure. Furthermore, although the design is reasonable, it does not meet the quality standards of internal control in operation.
(c) According to the potential misstatement, correctly determine the financial impact of key control deviations.