“The biggest difference is that auditors of non-public companies are not required to give an opinion on the operating effectiveness of an entity’s internal controls,” Kerr says. “Rather, they would test controls as a matter of audit effectiveness or efficiency.”
In short, internal controls for public companies are designed to protect against risk. Kerr also recommends that auditors consult with the American Institute of Certified Public Accountants (AICPA), which outlines the required sample sizes for monthly and weekly controls. Says Kerr: “As most small companies rely on controls that operate on a monthly or weekly basis, auditors should become familiar with this guidance in determining whether or not to test controls.”
By Laurie Dent
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