Internal Control Guidance and Regulations The auditor, who audits a public trade company, is required to perform an audit of internal control over financial reporting per the Public Company Accounting Oversight Board Standards (PCOB). In addition, the auditor should obtain an understanding of the internal control and test the effectiveness of the internal control. Obtained an understanding of internal control and assessing the control risk will provide with information regarding material misstatement that could affect the financial statements (Becker CPA Review). As the auditor understands the internal control, it must also be documented.

PCAOB standards require management to uses an acceptable internal control framework; the most common used framework between public companies is “COSO” (Committee of Sponsoring Organization of the Tradeway Commission)(Becker CPA Review), which requires:

-As the design of control is evaluated, it should be tested, if is capable of preventing or detect material misstatement.

-Evaluates internal control related with operating unit or business functions, following COSO framework

-Evaluates IT regarding the flow of transactions process and methodology

-Evaluate if the control has been implemented and were in used and also, evaluates the limitations

-Evaluates controls of the financial reporting process at year end (PCAOBUS)

-Evaluates the company risk assessment and management practices and procedures

-Obtain enough evidence to support an opinion on internal control over financial reporting and financial