Complete, validated, accurate; what is the first thing that comes to mind when you hear these words? It might not be auditing, but it should be. With an increased focus on completeness and accuracy, these terms are becoming more prevalent and key in the auditing world. Auditors now strive for the feeling of completeness and accuracy.
In the sense of auditing, completeness refers to ideas such as: all transactions that have occurred in the period were recorded, all liabilities have been included on the financial statements and all information is properly contained in the reports that management uses. Accuracy considers whether all amounts or other data used to record business transactions or events have been properly recorded.
When management within your organization is performing controls that use reports and data, they should be validating the completeness and accuracy of the data prior to performing the control. There are two types of controls where completeness and accuracy around information produced by the entity (IPE) is crucial. The first type is controls that are dependent upon the completeness and accuracy of the information. When auditors are testing these dependent controls, they must also verify the completeness and accuracy of the underlying IPE in order to ensure that the control was performed appropriately. The second type of control is a validating control. These controls themselves perform the validation of the completeness and accuracy of the IPE. In this case, as part of the auditors’ evaluation of the design of the control, they will evaluate how the control validates the completeness and accuracy of the IPE. To do this, the auditor will need to understand what the person performing the control does to validate the accuracy and completeness of the IPE.
This idea might be new to management and to those performing the controls. Implementing the practice of validating the IPE for completeness and accuracy will provide greater reliability on the data and will make your audit process much more efficient. Schneider Downs can assist clients in determining if they have adequate controls in place to ensure the completeness and accuracy of significant IPE used to support their business activities.
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