Page 107 - Rižnar, Igor, and Klemen Kavčič (ed.). 2017. Connecting Higher Education Institutions with Small and Medium-Sized Enterprises. Koper: University of Primorska Press
P. 107
Internal Audit in the Financing of Companies
In our case, identifying information and obtaining sufficient evi-
dence means:
• obtaining information about the process, and
• recording the process of financing activities.
In our case, the evaluation of the information obtained and audit ev-
idence means:
• assessment of the adequacy of controls,
• new risk assessment (the first risk assessment was in planning the
internal audit).
Findings and proposals for the internal audit are prepared as working
material using the components of co s o ii¹ and the scoring of internal
controls after the stages of the finance process. Below, we present the
components of co s o ii.
For example, in our case, the internal auditor found out that the com-
pany has a high risk of inadequate control activities and there is a risk
that the company does not prepare interim analysis of financing the
company.
The Operating Control Framework of the Auditor
co s o is an operational framework or a tool for setting up and evaluat-
ing the internal control system in the organisation. It is developed by
the Committee of Sponsoring Organisations of the Treadway Commis-
sions.
As Cohen says (2007), the best practice of internal financial controls
within finance spending is to use co s o ii as a framework for checking
internal controls. Other eu member states also have in place an inter-
nal and external control of finances (Cohen 2007, 34).
Koletnik and Kolar state (2008, 112) that a company with a high-
quality internal control and better auditing has greater opportunities
for development and existence.
¹ According to Wikipedia (see https://en.wikipedia.org/wiki/Committee_of_Sponsoring
_Organizations_of_the_Treadway_Commission), ‘The Committee of Sponsoring Or-
ganizations of the Treadway Commission (co s o) is a joint initiative of five private
sector organizations, established in the United States, dedicated to providing thought
leadership to executive management and governance entities on critical aspects of
organizational governance, business ethics, internal control, enterprise risk manage-
ment, fraud, and financial reporting. co s o has established a common internal control
model against which companies and organizations may assess their control systems.’
105
In our case, identifying information and obtaining sufficient evi-
dence means:
• obtaining information about the process, and
• recording the process of financing activities.
In our case, the evaluation of the information obtained and audit ev-
idence means:
• assessment of the adequacy of controls,
• new risk assessment (the first risk assessment was in planning the
internal audit).
Findings and proposals for the internal audit are prepared as working
material using the components of co s o ii¹ and the scoring of internal
controls after the stages of the finance process. Below, we present the
components of co s o ii.
For example, in our case, the internal auditor found out that the com-
pany has a high risk of inadequate control activities and there is a risk
that the company does not prepare interim analysis of financing the
company.
The Operating Control Framework of the Auditor
co s o is an operational framework or a tool for setting up and evaluat-
ing the internal control system in the organisation. It is developed by
the Committee of Sponsoring Organisations of the Treadway Commis-
sions.
As Cohen says (2007), the best practice of internal financial controls
within finance spending is to use co s o ii as a framework for checking
internal controls. Other eu member states also have in place an inter-
nal and external control of finances (Cohen 2007, 34).
Koletnik and Kolar state (2008, 112) that a company with a high-
quality internal control and better auditing has greater opportunities
for development and existence.
¹ According to Wikipedia (see https://en.wikipedia.org/wiki/Committee_of_Sponsoring
_Organizations_of_the_Treadway_Commission), ‘The Committee of Sponsoring Or-
ganizations of the Treadway Commission (co s o) is a joint initiative of five private
sector organizations, established in the United States, dedicated to providing thought
leadership to executive management and governance entities on critical aspects of
organizational governance, business ethics, internal control, enterprise risk manage-
ment, fraud, and financial reporting. co s o has established a common internal control
model against which companies and organizations may assess their control systems.’
105
