This unit applies to all sectors of the financial services industry and job roles such as accountant and financial auditor.

FNSACC506A

Implement and maintain internal control procedures

ELEMENT

PERFORMANCE CRITERIA

1. Assess options

1.1. Statutory requirements are identified from assessment of terms of reference and client objectives and obligations

1.2. Client activities and procedures are reviewed and analysed to establish familiarity with systems and guide the selection of appropriate audit methodologies

1.3. Financial audit methodologies are developed to identify significant features of the audit and establish criteria for conducting the audit in accordance with professional auditing standards

2. Identify information sources

2.1. Audit financial data sources are identified from evaluation of organisation's information systems

2.2. Audit lines of enquiry are created to support audit objectives and reduce audit risk to an acceptable level

3. Determine audit strategies

3.1. Client financial business characteristics are established from analysis of the general economy, the industry and the client's provided information

3.2. Client's inherent financial risk is assessed through value chain risk analysis

3.3. Internal control procedures for financial transactions are identified through discussion with the client and established professional standards

3.4. Audit methodologies use established sampling and selection techniques in a manner consistent with the internal control procedures and substantive testing

4. Schedule resources and timelines and monitor progress

4.1. Timeframes are established and personnel allocated to functions and tasks based on audit lines of inquiry

4.2. Resource use is reviewed regularly and intermittent reports developed and monitored with resource allocation and timeframes adjusted through discussion and agreement with the client and in accordance with professional accounting standards

5. Review data and verify statements

5.1. Significant strengths and weaknesses are identified in the controls and ranked in accordance to audit objectives

5.2. Evidence on financial systems and controls under review is obtained and evaluated using established testing procedures and in accordance with criteria identified in audit methodology

5.3. Management assertions are tested to achieve audit objectives

5.4. Sufficient appropriate audit evidence is gathered as a basis for an expert opinion

5.5. Financial statements are verified as materially misstated or correct

6. Determine reporting formats

6.1. Financial operational functions, services and systems are identified and documented in accordance with standard formats

6.2. Format is consistent with documentation requirements of the auditor and professional auditing standards

6.3. Financial audit opinions, including recommendations, are formulated and provided to the client in an established and acceptable format

Required skills

high level communication skills to:

determine and confirm corporate audit requirements and procedures using questioning and active listening as required

liaise with others, share information, listen and understand while maintaining confidences and ethical practices

use language and concepts appropriate to cultural differences

well-developed research and analysis skills for accessing and managing complex information

well-developed literacy skills for interpreting and analysing complex documentation including relevant legislation, financial reports and for producing audit reports

well-developed numeracy skills to accurately analyse, record and store data in accordance with professional and organisational requirements

IT skills for accessing and using integrated financial systems, spreadsheets and databases and internet information

learning skills to maintain knowledge of changes to auditing legislation and professional requirements

problem solving skills to identify any issues that have the potential to impact on the financial status of the organisation and to develop options to resolve these issues when they arise

organisational skills, including the ability to plan and sequence work

Required knowledge

current financial legislation such as:

taxable transactions

reporting requirements

current knowledge of relevant professional accounting standards

duties and responsibilities of auditors

ethical considerations for management and handling of files and records such as:

confidentiality

disclosure

principles of auditing

principles of internal control including statutory requirements

testing procedures and methods of inquiry

The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

Evidence of the ability to:

interpret and analyse organisational financial policies and procedures

comply with relevant professional standards and internal control procedures

access options to determine financial audit strategies

schedule resources and timelines and monitor progress

review data, verify financial statements and determine reporting formats.

Context of and specific resources for assessment

Assessment must ensure:

competency is demonstrated in the context of the financial services work environment and conditions specified in the range statement either in a relevant workplace or a closely simulated work environment

access to and the use of a range of common office equipment, technology, software and consumables.

access to an integrated financial software system and data.

Method of assessment

A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit:

evaluating an integrated activity which combines the elements of competency for the unit or a cluster of related units of competency

verbal or written questioning on underpinning knowledge and skills which may include formal examinations

setting and reviewing workplace projects and business simulations and scenarios

evaluating samples of work

accessing and validating third party reports.

Guidance information for assessment

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Statutory requirements may include:

delegated authorities

internal control procedures

reporting periods

taxable transactions

taxation payment timings.

Client objectives may include:

administrative efficiency

asset development

compliance adherence

financial consolidation

reduction in tax liabilities.

Financial audit methodologies may include:

analysis of documentation

application of criteria from recognised authorities

assessment of commercial viability

compliance and substantive testing

examination of processes and procedures of internal control

gathering and evaluating data

interpretation of compliance with statutory requirements

valuation of assets.

Data sources may include:

Australian Bureau of Statistics (ABS) economic data

budgets and forecasts

cash flow

credit ratings

financial markets monitoring services

financial statements and reports

market valuations.

Audit lines of enquiry may include:

questioning accounting staff and company officers

assessment of objectives of internal control

evaluation of achievement of accounting system objectives

management structure and practices

operation and strategic plans

specialist and expert advice.

Internal control procedures may include:

accuracy in valuations

decision making authorities

identification, measurement and recording of

income

assets

expenditure

liabilities

equity

risk management strategies

safeguarding and insurance of assets

transparency in financial reporting.

Established professional standards may include:

Auditing Guidance Statements

Australian Accounting Standards

Australian Accounting Standards Board (AASB) requirements

Australian Auditing Standards

ethical principles and professional practise

Superannuation Industry (Supervision) (SIS) Act.

Testing procedures may include:

achievement of debt repayment schedules

inspection of documentation for evidence of control procedures

interviews with personnel concerning the performance of duties

observation of personnel

reconstruction of accounting routines

submission of statutory returns.

Systems may include:

communication and distribution systems

databases

decision making authorities

financial information systems

personal information systems

recording and filing systems.

Unit sector

Accounting

This unit contains employability skills.