COSO Internal control process

As per COSO, internal control is a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

1.?????? Effectiveness and efficiency of operations

2.?????? Reliability of financial reporting

3.?????? Compliance with applicable laws and regulations

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·???????? Objectives-Operations, Reporting and Compliance

·???????? Components -Control Environment, Risk Assessment, Control activities, Information & communication and Monitoring activities

·???????? Structure- Entity-level Division and Operational Unit Function

?Road map to implement an internal controls framework-

1.?????? Current state understanding

·???????? Finalize scope and develop project plan

·???????? Engage with process/control owners and key stakeholders, including external auditors

·???????? Review existing policies and procedures, risk control matrices (RCM).

·???????? Identify key controls and agree with external auditors to drive more efficiency

2.?????? Document of Entity level controls (ELC)

·???????? Evaluate ELCs against the COSO 2013 requirements

·???????? Conduct walkthroughs to confirm control design

·???????? Document the ELCs

·???????? Independent design review and validation of ELCs

·???????? Report ELC design effectiveness gaps

3.?????? Document process flows and RCM

·???????? Document process flows/narratives to demonstrate the existing control environment

·???????? Identify broad categories and sources of risks for each business process.

·???????? Develop RCMs to ensure coverage of all financial reporting assertions

4.?????? GAP reporting and planning

·???????? Identify design and operating effectiveness control gaps

·???????? Evaluate the root cause for identified deficiencies

·???????? Recommend mitigation plan for remediation

·???????? Discuss exceptions identified with the management and external auditors

·???????? Agree on a remediation plan and support management in remediating the gaps

5.?????? Management planning

·???????? Continuously monitor and update the RCMs

·???????? Improve the effectiveness of internal control

·???????? Keep a tab on continuous improvements needed in the framework, processes.

·???????? Leading practices and changes in laws and regulations

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Most important point before starting any audit we need to check as per

·???????? Industry Research

·???????? Experience.

·???????? Framework and Methodology