#28 YouTube

1.12.5 Key Management practices for Assessing & evaluating the system of Internal Control

Module reference with Mnemonics

LINK: Mc Donalds vala i.e CA aur Article vala i.e CA aur Article McD ka Assess & evaluate krte hai system of Internal Control

CA Plan बनाता है और Scope बताता है Articles को कि कितना time & extent मे Audit करना है Articles उस Plan को Execute करते है। (1-3) 

अब Articles Client (McD) का review करना start करते है, सबसे पहले BPC का review करते है, फिर Monitor करते है उनका internal Control (4-5) 

अब articles को कुछ गलतियां मिली जो उन्होंने Principal को report करदी Principal (CA) ने McD के owner को बोला के तुम एक बार Self Assessment करलो varna  मे रिपोर्ट qualify करदूंगा। Auditors independent होने चाहिए।  (6-8)

  1. Plan Assurance Initiatives: Plan assurance initiatives based on enterprise objectives and conformance objectives, assurance objectives and strategic priorities, inherent risk resource constraints, and sufficient knowledge of the enterprise.
  2. Scope assurance initiatives: Define and agree with management on the scope of the assurance initiative, based on the assurance objectives.
  3. Execute assurance initiatives: Execute the planned assurance initiative. Report on identified findings. Provide posit ve assurance opinions, where appropriate, and recommendations for improvement relating to identified operational performance, external compliance and internal control system residual risks.
  4. Review Business Process Controls Effectiveness: Review the operation of controls, including a review of monitoring and test evidence to ensure that controls within business processes operate effectively. 
  5. Monitor Internal Controls: Continuously monitor, benchmark and improve the IT control environment and control framework to meet organizational objectives.
  6. Identify and Report Control Deficiencies: Identify control deficiencies and analyze and identify their underlying root causes. Escalate control deficiencies and report to stakeholders.
  7. Perform Control Self-assessments: Encourage management and process owners to take positive ownership of control improvement through a continuing program of self-assessment to evaluate the completeness and effectiveness of management's control over processes, policies and contracts.
  8. Ensure that assurance providers are independent and qualified: Ensure that the entities performing assurance are independent from the function, groups or organizations in scope.  


#31 YouTube (Practice Manual Question)


What is the role of IT in enterprises? Explain the different levels of managerial activity in an enterprise. 

Answer: Role of IT in Enterprises is as under:


Background: Murthal restaurant पुराना वाला है जो अब IT का use करने की सोच रहा है। IT का इस्तेमाल Murthal (enterprise) मे होने जा रहा है। 

Story :

पहले Murthal रेस्टोरेंट हाथ से Billing करता था (Data processing) लेकिन अब IT को use करने से computerized होगया है। ये सिर्फ काम easy करने के लिए नहीं बल्कि इससे Competetive advantage भी है। [ Murthal और Haweli दोनो competition मे है ]

अब IT के आने से काम तो change हुआ बल्कि उसे करने का तरीका भी change होगया e.g Vending Machines ; पहले खाना waiter लाते थे या जा के order करना पड़ता था, अब सिक्का डालो खाना निकालो (Transformed the way business processes are performed)

ये Vending Machines से Internal control जैसे लगते थे वो तो change होगा ही बल्कि ये Innovation था strategic point of view से because (Staff कम लगेंगे इस काम मे तो salary भी बचेगी उनकी)

अब इतनी Machines होंगी एक restaurant मे तो उसकी Value तो बढ़ेगी ही (जैसे Murthal का इतना नाम हो गया है, उसकी value increase होगयी है)

ये सब करने लिए i.e Value increase करने के लिए Murthal को Extensive Organisation restructuring करनी पड़ेगी ( like: Construction, decoration etc.)

Module Answer:
  • In an increasingly digitized world, enterprises are using IT not merely for data processing but more for strategic and competitive advantage too. IT deployment has progressed from data processing to MIS to Decision Support Systems to online transactions/services: Billing
  • IT has not only automated the business processes but also transformed the way business processes are performed. IT is used to perform business processes, activities and tasks and it is important to ensure that IT deployment is oriented towards achievement of business objectives: Vending Machines
  • The extent of technology deployment not only impacts the way internal controls are implemented in an enterprise but also provide better and innovative services from strategic perspective: ये Innovation था strategic point of view से
  • An IT strategy aligned with business strategy ensures the value creation and facilitates benefit realization from the IT investments: जैसे Murthal का इतना नाम हो गया है
  • Extensive organization restructuring or Business Process Re-Engineering may be facilitated through IT deployments: Construction, decoration etc.

Explain the different levels of managerial activity in an enterprise. 

Top level : Strategic
Mid level : Management
Lower level : Operational