On the basis of a survey of U.S. public company audit committee members, we provide detailed insights into the process underlying audit committee oversight of internal control over financial reporting (ICFR), and we explore cross‐sectional variations in audit committee ICFR oversight. We find that audit committees spend the most time in the monitoring activities and control environment areas and the least time in the information and communication and control activities (related to revenue) areas. Further, our exploratory regression analysis reveals that audit committee member age and internal audit experience, company size and regulated industry are positively associated with the extent of overall audit committee ICFR oversight, whereas audit committee member certified public accountant (CPA) certification is negatively related to ICFR oversight. Finally, we provide many specific examples of ICFR oversight process elements that appear to be more substantive, extensive and proactive versus more ceremonial, limited and reactive.
This two-part educational resource was developed to enhance students’ understanding of a key aspect of the audit guidance concerning financial statement audit planning for substantive testing at the assertion level. Assuming the role of audit associates at a CPA firm, students first engage in a training activity in which they deconstruct substantive audit tasks into significant financial statement accounts, management assertions, and types of audit procedures related to each task. Then students consider inherent risk factors for a client engagement in a mini case and apply relevant accounts, management assertions, and detailed substantive audit procedures. These resources are easy to implement and require little advanced preparation, yet they provide a rich instructional resource for either new or experienced auditing faculty. Assessment results and student survey responses reveal the effectiveness of these resources in promoting students’ comprehension of the critical role of management assertions in the audit planning process.
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