7/5/2023 0 Comments Audit findings![]() ![]() The process owner under the supervision of the CAP Owner needs to perform the specific set of activities outlined in the CAP. acquisition of new software to automate a process or training), management support and approval will be required to facilitate the process. Where resources including budgetary allocation are required to resolve the CAP (e.g. The involvement of management in implementing CAPs is essential to communicate to employees (particularly process owners) management’s support of the new or updated procedures and ensure a smooth transition. Process owners may be at various levels within the organizations depending on the nature of the CAP and the audited area however the CAP Owner should ideally be in a management position. Process owners within the audited area are key to the implementation of CAPs as they will perform the activities which constitute the CAP whether one-time or on an ongoing basis. ![]() Identify responsible parties and resources needed.On a quarterly basis, spot checks will be performed to identify and resolve transactions that were not properly approved due to management overrides. The system may be subject to management overrides of established checks and balances in the system. Note that the system essentially performs the checks intended to be performed by the development of the manual checklist The system now blocks and returns all transactions for which the proper automated approvals have not been received. The procurement process has been automated and linked to the accounts payable module in the accounting system. ![]() The estimated timeline for completion for this is 4/30 The Director of Procurement will update the procurement procedures to require the completion of a checklist to ensure that all key requirements within the procurement process are completed and signed off prior to payment. ![]() Further, without proper approval, employees may procure goods and services which are not for a business purpose and which fall outside the budgetary allocation. The company is not in compliance with the procurement approval policy. The total value of the goods and services purchased amounted to $68,479. In our testing of the approval process within procurement, we identified 6 purchases for which proper approval was not obtained. as a result of changes to the audited process, then the audit finding can be closed or the CAP will need to be updated as appropriate. Where the risk exposure no longer exists or has been altered e.g. budgetary constraints for the development of new systems), CAPs may be implemented even beyond six months or years after the finding was discovered. Further, depending on the nature of the finding and the resources required (e.g. This is important because most CAPs are typically planned to be implemented between one to six months of identifying the audit finding. If there has been a considerable time lag between the initial development of the CAP and its implementation, you need to identify the underlying risk associated with the audit finding and determine whether the corrective action plan drafted in response to the risk exposure is still relevant. Determine whether the CAP is still relevant.If the audit finding lends itself to resolution by corrective action planning, then the following steps will be helpful in ensuring that the risks which underlie the finding are mitigated and repeat audit findings are minimized. Resolving findings with Corrective Action Plans In that scenario, the adjustment will need to be passed regardless of any risk assessment performed to ensure that the financial statements are fairly stated. I should mention here that the corrective action planning process does not necessarily cover audit findings which require an adjustment to be passed e.g. The second is to eliminate or revise the offending control activity to the extent that there are compensating controls in place to address the core risk(s). The first is to accept the risk underlying the audit finding and its associated impact. If you choose not to implement a CAP however, there are two options to close the audit finding. The most effective way to resolve an audit finding is by implementing a Corrective Action Plan (CAP) which address the underlying risk(s) associated with the audit finding. A weak internal control system reduces the reliance placed on it by auditors in future audits and assessments and increases the level of substantive testing which invariably leads back to repeat findings and strains resources during audits. Unresolved audit findings often lead to repeat audit findings which call into question the strength of your organization’s internal control system. ![]()
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