Business Processes & Internal Controls

Narratives / Flowcharts • Relevant Controls • Design & Implementation • Operating Effectiveness

The Business Processes & Internal Controls training is a core audit program focused on how auditors understand, document, and evaluate client processes and internal controls in accordance with ISA 315 and ISA 330. The course provides practical guidance on documenting business processes using narratives or flowcharts, identifying relevant controls that address risks of material misstatement, and performing Design & Implementation (D&I) and Testing of Operating Effectiveness (TOE) procedures.

This training emphasizes that effective control understanding is foundational to a risk-based audit approach. Proper process documentation and control evaluation support accurate risk assessment, appropriate audit responses, and consistent audit quality. The training also highlights mandatory D&I procedures for presumed significant fraud risks, including management override of controls and revenue recognition.

The course applies to:

• All statutory audits conducted under ISAs
• All significant business processes impacting financial reporting
• Engagement teams involved in planning, risk assessment, and controls testing

Key Learning Objectives:

By the end of this training, participants will be able to:

• Document business processes effectively using narratives, flowcharts, or a combination of both.
• Identify key transaction flows, control points, and IT dependencies within business processes.
• Distinguish between relevant and non-relevant controls for audit purposes.
• Identify controls that address risks of material misstatement, including presumed significant fraud risks.
• Perform and document Design & Implementation (D&I) testing, including mandatory walkthrough procedures.
• Understand when Testing of Operating Effectiveness (TOE) is required and how it is performed.
• Evaluate and document control design, implementation, and effectiveness in a clear and ISA-compliant manner.
• Link control understanding and testing results to control risk assessment and audit strategy.

Who Should Attend:

This training is designed for:

• Audit Staff
• Senior Auditors
• Newly promoted Seniors
• Engagement team members involved in:
  • Process documentation
  • Risk assessment
  • Controls identification
  • Walkthroughs and controls testing

It is particularly relevant for team members assuming greater responsibility for planning, judgment, and documentation in audits.

Course Highlights:

Participants will explore:

• Documenting Business Processes How to prepare clear and complete narratives and/or flowcharts that capture:
  • Transaction initiation
  • Processing and authorization steps
  • IT involvement
  • Reconciliations and review controls
  • Financial reporting points
• Identifying Relevant Controls How to identify and select controls that mitigate financial reporting risks, including:
  • Preventive vs. detective controls
  • Manual vs. automated controls
  • Entity-level and process-level controls
  • Controls addressing significant and presumed fraud risks
• Design & Implementation (D&I) Testing How to confirm that controls are:
  • Appropriately designed to prevent or detect misstatements
  • Implemented and operating as described Including walkthrough requirements and documentation expectations.
• Presumed Significant Fraud Risks Required understanding and D&I procedures for controls addressing:
  • Management override of controls
  • Revenue recognition
• Testing Operating Effectiveness (TOE) When and how to test whether controls operate effectively throughout the period, including:
  • Appropriate testing methods
  • Evidence requirements
  • Documentation of results and conclusions
• Walkthroughs and Evidence Expectations
  How to perform effective walkthroughs that trace transactions end-to-end and gather sufficient, appropriate evidence to support control conclusions.

Prerequisites:

Participants are encouraged to have:

• A basic understanding of audit planning and risk assessment.
• Familiarity with:
• • ISA 315 (Risk Assessment and Internal Control)
  • ISA 330 (Responses to Assessed Risks)
• Prior exposure to audit documentation and basic testing procedures.

No advanced IT or internal audit background is required; the course is suitable for all audit teams performing financial statement audits.