Internal Control Over Financial Reporting (ICFR)
Evaluating Internal Controls
During an integrated audit, the auditor tests the design and operating effectiveness of controls over financial reporting. The objective is to determine whether material weaknesses exist at year-end.
- Understand internal controls.
- Test control design.
- Test operating effectiveness.
- Evaluate identified deficiencies.
Note
A material weakness generally results in an adverse opinion on internal control over financial reporting.
Summary
Testing ICFR helps determine whether controls effectively prevent or detect material misstatements.