An experienced auditor knows the procedures associated with assessing fraud or o

Question

An experienced auditor knows the procedures associated with assessing fraud or other inherent risks. In today's scandal-ridden financial environment, an auditor's ability to spot the trappings of potential hidden problems in an audited entity's internal control system is essential.

Discuss and contrast the issues surrounding the implementation of a comprehensive internal control structure in a large corporation and in a small family-owned business with only six employees. Your discussion needs to consider the limitations of systems in both a large company and a small company and the constraints of cost-benefit.

Explanation / Answer

In a closed held family business, where there are only six employees will have less transactions. The audit requirement may be cursory in nature and the frequency may be less also, because the impact of a mistake is generally less. In the case of large corporation when the transactions are very complex, The requirement of audit will be extensive and intensive as there is great opportunity for unintentional. Generally in large corporations, there are atleast two layers of audit, one layer is called internal audit. Where in the staffs of another department or a department named audit department conducts the audit. The other layer is known as external audit wherein a outside firm/professional specilized in audit is appointed to conduct of the audit and report. At the board lever, many organizations also have a audit committee who looks into the report of all these auditors and take appropriate decisions. Many times before an organizations goes for public issues, they appoint a agency of high repute to audit and certify the transactions of the corporation for better credibility in the market. So in corporate the audit is more intense and more frequent

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