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Decision Matrix: Auditing Framework for Evaluating Process/Transaction-Level Exceptions and Deficiencies

Decision Matrix: Auditing Framework for Evaluating Process/Transaction-Level Exceptions and Deficiencies

by Rick Turoczy on November 10, 2004

This paper outlines a suggested framework for evaluating manual and automated process/transaction-level exceptions and deficiencies resulting from the evaluation of a company’s internal control over financial reporting. This paper should be read in conjunction with Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements (AS2), especially the definitions in paragraphs 8 through 10, the section on evaluating deficiencies in paragraphs 130 through 141, the examples of significant deficiencies and material weaknesses in Appendix D, and the Background and Basis for Conclusions in Appendix E. The framework is not a substitute for AS2 and other relevant professional literature.

Issuers and auditors may find this framework useful. It is not intended to, and should not, be utilized when evaluating control deficiencies in IT general controls and other types of exceptions and deficiencies.

The framework was developed by representatives of the following nine firms:

  • BDO Seidman LLP
  • Crowe Chizek and Company LLC
  • Deloitte & Touche LLP
  • Ernst & Young LLP
  • Grant Thornton LLP
  • Harbinger PLC
  • KPMG LLP
  • McGladrey & Pullen LLP
  • PricewaterhouseCoopers LLP

In addition, William F. Messier, Jr., Professor, Georgia State University, also contributed to the development of the framework.

Decision Matrix: Auditing Framework for Evaluating Process/Transaction-Level Exceptions and Deficiencies (PDF)

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