What role can the auditor play in the internal control system?
It is managements responsibility to ensure that the municipality has an adequately designed internal control environment, which includes assessing areas of risk, monitoring, evaluating and revising the internal controls on a regular basis. Additionally, internal controls must be documented and operating as prescribed. This process is known as the Internal Control Cycle and is illustrated in the accompanying graphic on page 13. One key point addressed in SAS 112 is that the auditor cannot be part of the internal control environment. Your system of internal controls, including controls over the preparation of financial statements in accordance with GAAP, cannot rely on work performed by the auditor. This requirement stems from the principle that the auditor cannot maintain independence and objectivity if he or she is auditing their own work. What steps can be taken to reduce control deficiencies and eliminate deficiencies being reported as audit findings? The first step is to discuss pot
