What is the scoping of internal controls over financial reporting all about?
The exercise of scoping for the purposes of CEO/CFO certification is about understanding specifically which significant accounts — and which related significant processes — must be documented and assessed. The determination of significant accounts should incorporate both quantitative measures, such as materiality, and qualitative risk factors, such as the extent of judgment and complexity of the account. Once organizations identify those significant accounts, they can begin to understand the major classes of transactions flowing through them, and more accurately pinpoint the processes that generate those transactions.
